TABLE 16-13
A local store developed a multiplicative time-series model to forecast its revenues in future quarters, using quarterly data on its revenues during the 4-year period from 2005 to 2009. The following is the resulting regression equation:

-Referring to Table 16-13, the estimated quarterly compound growth rate in revenues is around:
A) 1.2%.
B) 2.8%.
C) 12%.
D) 28%.

Question

TABLE 16-13
A local store developed a multiplicative time-series model to forecast its revenues in future quarters, using quarterly data on its revenues during the 4-year period from 2005 to 2009. The following is the resulting regression equation:

-Referring to Table 16-13, the estimated quarterly compound growth rate in revenues is around:
A) 1.2%. 
B) 2.8%. 
C) 12%. 
D) 28%.

Quizplus · Accepted Answer

The quarterly compound growth rate can be calculated using the coefficient of the quarterly dummy variables, which is 0.028. This represents a quarterly growth rate of 2.8% (0.028*100) in revenues.

TABLE 16-13 A Local Store Developed a Multiplicative Time-Series Model to Forecast