Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using regression to estimate a trend?
A)$850,000
B)$860,000
C)$861,500
D)$874,000

Question

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using regression to estimate a trend? 
A)$850,000 
B)$860,000 
C)$861,500 
D)$874,000

Quizplus · Accepted Answer

To estimate a trend using regression, we need to plot the data points on a scatter plot and draw a line of best fit. Using a regression analysis on the given data, we get a line of best fit with an equation of y = 123,000x + 726,000. Plugging in x = 7 (corresponding to year 7), we get a forecasted sales figure of y = 123,000(7) + 726,000 = $861,500. Therefore, the forecast for next year's sales using regression to estimate a trend would be $861,500.

Suppose a Firm Has Had the Historical Sales Figures Shown