TABLE 16-5 a Contractor Developed a Multiplicative Time-Series Model to Forecast the Forecast

question 51

Multiple Choice

TABLE 16-5
A contractor developed a multiplicative time-series model to forecast the number of contracts in future quarters, using quarterly data on number of contracts during the 3-year period from 2006 to 2008. The following is the resulting regression equation:

-Referring to Table 16-5, the best interpretation of the coefficient of X (0.117) in the regression equation is:

• A) the quarterly compound growth rate in contracts is around 30.92%.
• B) the annual compound growth rate in contracts is around 30.92%.
• C) the quarterly compound growth rate in contracts is around 11.7%.
• D) the annual compound growth rate in contracts is around 11.7%.

---

Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, often reflecting the cost of capital or the risk of the investment.

Present Value

The present evaluation of a future cash sum or series of cash receipts, factoring in a certain rate of return for discounting.

Interest Rate

The sum a lender charges a borrower to use assets, conveyed as a percentage of the principal's amount.