Question

Assume you work as budget analyst for City of Blue Ridge and you are preparing the budget for Fiscal Year 2020-2021. The data of tax revenue of past 10 years have been obtained as following. You are using two of the three different forecast models - 3-year moving average (with the alpha 0.4), linear regression trend project, and exponential smoothing.

(1) What would be your forecasted revenue for 2020-2021based on your forecasting models, respectively?

(2) Which model gives you the better estimate? In other words, which model would you choose? Provide a justification for your choice.

Year	Tax Levies
2010-2011	31,039,086
2011-2012	30,838,534
2012-2013	31,389,341
2013-2014	30,005,085
2014-2015	31,657,568
2015-2016	32,647,441
2016-2017	32,676,680
2017-2018	33,704,285
2018-2019	34,150,363
2019-2020	35,048,537
2020-2021	?

Answer 1

R