Question

The owner of Showtime Movie Theaters, Inc., would like to predict weekly gross revenue as a function of advertising expenditures. Historical data for a sample of eight weeks are entered into the Microsoft Excel Online file below. Use the XLMiner Analysis ToolPak to perform your regression analysis in the designated areas of the spreadsheet. Open spreadsheet Develop an estimated regression equation with the amount of television advertising as the independent variable (to 2 decimals). Revenue = + TVAdv Develop an estimated regression equation with both television advertising and newspaper advertising as the independent variables (to 2 decimals). Revenue = + TVAdv + NewsAdv Is the estimated regression equation coefficient for television advertising expenditures the same in part (a) and in part (b)? Predict weekly gross revenue for a week when $4.9 thousand is spent on television advertising and $3.9 thousand is spent on newspaper advertising (to 2 decimals)?

Answer 1

Answer:

The predicted value of Revenue is $98.24.

Explanation:

The data provided is for the weekly gross revenue, the amount of television advertising and the amount of newspaper advertising.

Determine the regression equation developed to estimate the amount of weekly gross revenue based on television advertising using Excel.

Consider the Excel image for Summary Output for Weekly Revenue Vs. T.V. Adv.

The estimated regression equation with the amount of television advertising as the independent variable is:

Revenue = 89.31 + 1.27 TVAdv

Consider the Excel image for Summary Output for Weekly Revenue Vs. T.V. Adv. & News Adv.

The estimated regression equation with both television advertising and newspaper advertising as the independent variables is:

Revenue = 83.78 + 1.78 TVAdv + 1.47 NewsAdv

For TVAdv = $4.9 and NewsAdv = $3.9 predict the value of Revenue as follows:

$\text{Revenue} = 83.78 + 1.78\ \text{TVAdv} + 1.47\ \text{NewsAdv}$

             $=83.78 + (1.78 \times 4.9) + (1.47 \times 3.9)\\\\=98.235\\\\\approx 98.24$

Thus, the predicted value of Revenue is $98.24.