A Local Tire Dealer Wants to Predict the Number of Tires

question 24

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 monthly tire sales (in thousands of tires) and monthly advertising expenditures (in thousands of dollars) .The simple linear regression equation is = 3 + 1X.The dealer randomly selects one of the six observations with a monthly sales value of 8000 tires and monthly advertising expenditures of $7000.Calculate the value of the residual for this observation.

• A)1
• B)-2
• C)2
• D)-1

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Definitions:

CCA Tax Shield

A deduction that Canadian businesses can claim for the depreciation of tangible property, reducing taxable income.

After-Tax Annual Lease Payment

The amount of lease payments due each year after accounting for the tax effects.

After-Tax Discount Rate

The discount rate after adjusting for taxes, used to evaluate investments and their future cash flows after tax implications.

After-Tax Lease Payment

After-tax lease payment refers to the lease expense remaining after deducting taxation benefits associated with the lease, illustrating the net cost of leasing to the lessee.