Kim's Nail Salon Uses a Weighted Moving Average Method to Forecast

question 2

Multiple Choice

Kim's Nail Salon uses a weighted moving average method to forecast demand. She assigns a weight of 5 to the previous month's demand, 3 to demand two months ago, and 2 to demand three months ago. If demand was 800 customers in April, 900 customers in May, 1,200 customers in June, and 2,000 customers in July, what should her forecast for August be?

• A) 1,540
• B) 910
• C) 1,400
• D) 1,210

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Definitions:

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.

Book Value

The net value of a company's assets minus its liabilities, often used to assess a company's financial health.

Capital

Financial assets or the financial value of assets, such as cash, used by a company to fuel its business operations.

CAPM

The Capital Asset Pricing Model, a model that describes the relationship between systematic risk and expected return for assets, particularly stocks.