In order to analyze sales as a function of advertising expenses, the sales manager of Smith
Company developed a simple regression model. The model included the following equation,
which was based on 32 monthly observations of sales and advertising expenses with a
related coefficient of determination of .90.
Sales = $10,000 + (2.5 × Advertising expenses)
If Smith Company’s advertising expenses in one month amounted to $1,000, the related
point estimate of sales would be