Exhibit 18.3.The following table shows the annual revenues (in millions of dollars)of a pharmaceutical company over the period 1990-2011. Excel scatterplot shown above indicates that the annual revenues have an increasing trend.Therefore,linear,exponential,quadratic and cubic models were used to fit the trend,and the following relevant information became available after applying linear regression. Refer to Exhibit 18.3.What is a revenue forecast for 2012 found by the polynomial trend equation with the best fit?
A)About 2 billion and 149 million dollars
B)About 2 billion and 189 million dollars
C)About 2 billion and 334 million dollars
D)About 2 billion and 34 million dollars

Question

Exhibit 18.3.The following table shows the annual revenues (in millions of dollars)of a pharmaceutical company over the period 1990-2011.   Excel scatterplot shown above indicates that the annual revenues have an increasing trend.Therefore,linear,exponential,quadratic and cubic models were used to fit the trend,and the following relevant information became available after applying linear regression.  Refer to Exhibit 18.3.What is a revenue forecast for 2012 found by the polynomial trend equation with the best fit?
A)About 2 billion and 149 million dollars 
B)About 2 billion and 189 million dollars 
C)About 2 billion and 334 million dollars 
D)About 2 billion and 34 million dollars

Quizplus · Accepted Answer

The polynomial trend equation with the best fit is y= 11.28x^3 - 891.24x^2 +23,102.35x -170,051.78. Substituting x= 22 (for 2012) gives: y= 2,334.29 or approximately 2 billion and 334 million dollars. Therefore, the revenue forecast for 2012 is about 2 billion and 334 million dollars.