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 a. Develop an estimated regression equation with the amount of television advertising as the independent variable (to 2 decimals). Revenue = TVAdv b. Develop an estimated regression equation with both television advertising and newspaper advertising as the independent variables (to 2 decimals). Revenue = + TVAdv + NewsAdy c. Is the estimated regression equation coefficient for television advertising expenditures the same in part (a) and in part (b)? d. Predict weekly gross revenue for a week when $5.3 thousand is spent on television advertising and $3.7 thousand is spent on newspaper advertising (to 2 decimals)? in thousands

Answer 1

Output using excel:

a)

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.807807
R Square	0.652553
Adjusted R Square	0.594645
Standard Error	1.215175
Observations	8
ANOVA
	df	SS	MS	F	Significance F
Regression	1	16.6401	16.6401	11.26881	0.015288
Residual	6	8.859903	1.476651
Total	7	25.5
	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	88.63768	1.582367	56.01588	2.17E-09	84.76577	92.50959
TV Ads	1.603865	0.477781	3.356905	0.015288	0.434777	2.772952

Revenue = 88.64 + 1.60 TVAdv

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b)

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.958663
R Square	0.919036
Adjusted R Square	0.88665
Standard Error	0.642587
Observations	8
ANOVA
	df	SS	MS	F	Significance F
Regression	2	23.43541	11.7177	28.37777	0.001865
Residual	5	2.064592	0.412918
Total	7	25.5
	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	83.23009	1.573869	52.88248	4.57E-08	79.18433	87.27585
TV Ads	2.290184	0.304065	7.531899	0.000653	1.508561	3.071806
Newspaper Ads	1.300989	0.320702	4.056697	0.009761	0.476599	2.125379

Revenue = 83.23 + 2.29 TVAdv + 1.30 NewsAdv

c)

No, the coefficient is not the same for part a) and part b).

d)

Revenue = 83.23 + 2.29*5.3 + 1.30*3.7 = 100.18 thousands