Assignment:
You are in the paper manufacturing business and the company is trying to determine whether to build another plant.
(a) Your chief economist tells you that of all the manufacturing industries, cyclical swings in the paper industry are most closely correlated with GDP. Annual data will suffice for this calculation. How strong is that correlation?
(b) By calculating the DW and testing for normality of residuals, how confident are you that this relationship will work well in the future?
(c) What changes, if any, would you make to the equation based on these statistics?
(d) The CEO wants to build another plant only if paper production will rise an average of 5% or more per year over the next five years. Your forecast calls for GDP to rise an average of 4% per year. Based on this forecast, should the company build the plant or not?
(e) What other variables would you add to the equation to strengthen the correlation and provide better advice about building the paper plant?
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.