A Regression Analysis Between Sales (Y in $1000) and Advertising

question 102

Multiple Choice

A regression analysis between sales (y in $1000) and advertising (x in $100) resulted in the following least-squares line: = 82 + 7x. Given this information, if advertising costs were $900, what could we reasonably expect the amount of sales (in dollars) to be?

• A) $6,382
• B) $82,063
• C) $88,300
• D) $145,000

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Definitions:

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in net profit or loss.

Net Operating Profit After Taxes (NOPAT)

A company's operating profit after adjusting for taxes, reflecting the potential cash earnings if the company had no debt.

EBIT

Earnings Before Interest and Taxes; a measure of a firm's profit that includes all income and expenses except interest and income tax expenses.

Income Statement

A financial statement that shows a company's income and expenses over a specific period, culminating in net profit or loss.