The Following Regression Model Has Been Proposed to Predict Sales

question 13

Essay

The following regression model has been proposed to predict sales at a furniture store. = 10 - 4x₁ + 7x₂ + 18x₃
where
x₁ = competitor's previous day's sales (in $1,000s)
x₂ = population within 1 mile (in 1000s)
x₃ = 1 if any form of advertising was used, 0 if otherwise = sales (in $1,000s)
a.Fully interpret the meaning of the coefficient of x₃.
b.Predict sales (in dollars) for a store with competitor's previous day's sale of $3,000, a population of 10,000 within 1 mile, and six radio advertisements.

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Definitions:

Dividend Payout Ratio

A financial metric that shows the percentage of earnings a company distributes to its shareholders in the form of dividends.

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the costs associated with making and selling the product, calculated as net income divided by revenue.

Projected Addition

Projected addition refers to the estimated increase or expansion in a company's assets, revenues, or capabilities, based on future plans or investments.

Debt-Equity Ratio

An indicator that specifies the proportional role of shareholders' equity and debt in asset funding.