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In: Finance

Suppose a firm has had the following historic sales figures. Year: 2009 2010 2011 2012 2013...

Suppose a firm has had the following historic sales figures.

Year: 2009 2010 2011 2012 2013
  Sales: $ 2,430,000. $ 3,850,000 $ 4,440,000 $ 4,920,000 $ 5,540,000

What would be the forecast for next year’s sales using regression to estimate a trend?

Next years sales?

Solutions

Expert Solution

Year

Deviation from 2008 (X)

Y

2009

1

2430000

2010

2

3850000

2011

3

4440000

2012

4

4920000

2013

5

5540000

Running Regression in Excel Provide following output:

Coefficients

Standard Error

t Stat

P-value

Lower 95%

Upper 95%

Intercept

2049000

335022.9

6.116

0.008786

982807.7

3115192

X Variable 1

729000

101013.2

7.216879

0.005485

407530.9

1050469

Trend Line:

      2,049,000 + 729,000 (X)

Projected Sales for 2014:

     Value of X for 2014 = 6

Forecasted Sales (2014) = 2,049,000 + 729,000 (6)

                                           = 6,423,000

jeff jeffy answered 2 years ago
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