SCENARIO 16-14 a Contractor Developed a Multiplicative Time-Series Model to Forecast the Forecast

question 104

Multiple Choice

SCENARIO 16-14
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 2011 to 2013.The following is the resulting regression equation:
ln Y^ˆ = 3.37 + 0.117 X - 0.083 Q₁ + 1.28 Q₂ + 0.617 Q₃
where
Y^ˆ is the estimated number of contracts in a quarter.
X is the coded quarterly value with X = 0 in the first quarter of 2011.
Q₁ is a dummy variable equal to 1 in the first quarter of a year and 0 otherwise.
Q₂ is a dummy variable equal to 1 in the second quarter of a year and 0 otherwise.
Q₃ is a dummy variable equal to 1 in the third quarter of a year and 0 otherwise.
-Referring to Scenario 16-14,to obtain a forecast for the first quarter of 2014 using the model,which of the following sets of values should be used in the regression equation?

• A)X = 12,Q₁ = 0,Q₂ = 0,Q₃ = 0
• B)X = 12,Q₁ = 1,Q₂ = 0,Q₃ = 0
• C)X = 13,Q₁ = 0,Q₂ = 0,Q₃ = 0
• D)X = 13,Q₁ = 1,Q₂ = 0,Q₃ = 0

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Definitions:

Present Value

The value today of a future money sum or sequence of cash flows, based on a specific interest rate.

Interest Rate

The cost of borrowing money or the return on savings, usually expressed as a percentage.

Interest Rate

The percent of principal charged by the lender for the use of its money or the rate earned on deposited funds.

Revenues

Revenues are the total amount of money generated by a company from its business activities, such as the sale of goods or services, before any costs or expenses are deducted.