A linear trend equation for sale of the form Qt = a + bt was estimated for the period 1993-2007 i.e. t=1993, 1994, 2007 The results of the regression are as follow:
Dependent variable : Qt, R-Square, F-ratio, P-Value on F
Observations : 15, 0.6602, 25.262, 0.0002
Variable, Parameter Estimate, Standard Error, T-ratio, P-value
Intercept 73.71460, 34.08, 2.16, 0.0498
t 3.7621, 0.749, 5.02, 0.0002
a) Evaluate the statistical significance of the estimated coefficients use 5 percent for significance level Does this equation indicate a significant trend? (6m)
b) Using this equation, forecast sales in 2008 and 2009. (4M)
c) Comment on the precision of these two forecasts. (4m)