A Local Tire Dealer Wants to Predict the Number of Tires

question 5

Multiple Choice

A local tire dealer wants to predict the number of tires sold each month.He believes that the number of tires sold is a linear function of the amount of money invested in advertising.He randomly selects 6 months of data consisting of tire sales (in thousands of tires) and advertising expenditures (in thousands of dollars) .Based on the data set with 6 observations,the simple linear regression equation of the least squares line is = 3 + 1x. = 24 = 124 = 42 = 338 = 196 MSE = 4
Using the sums of the squares given above,determine the 90% prediction interval for an individual month's tire sales when the advertising expenditure is $5000.

• A)(3.32 12.68)
• B)(3.74 12.26)
• C)(6.62 9.38)
• D)(6.08 9.92)

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Definitions:

DOL-EPS Analysis

A methodology to assess the Degree of Operating Leverage and its impact on a company's Earnings Per Share under different sales volume scenarios.

Business Performance

A measure of how effectively a company uses its resources to achieve its objectives and fulfill stakeholder expectations.

Interest Coverage Ratio

A financial metric that measures a company's ability to pay interest on its outstanding debt.

ROE

Return on Equity; a measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested.