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# Forecasting

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Submitted By uance
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Exercise 9.1
Moving Expenses:
Fiscal Year Expenses
20X2 \$5,500,000
20X3 \$6,000,000
20X4 \$6,750,000
20X2-4 \$18,250,000
20X5 \$18,250,000/3 = \$6,083,333
Weighted Expenses:
Fiscal Year Expenses Weight Weighted Score
20X2 \$5,500,000 x 1 = \$5,500,000
20X3 \$6,000,000 x 2 = \$12,000,000
20X4 \$6,750,000 x 3 = \$20,250,000 6 \$37,750,000
20X5 \$37,750,000/6 = \$6,291,667
Exponential Smoothing:
Given
The last forecasting (LF) = \$6,300,000, the last data (LD) = \$6,750,000, a = 0.95
I have used the 0.95 alpha because I believe the new forecast will be based on the last data.
NF = LF + a (LD – LF)
NF= \$6,300,000 + 0.95 (\$6,750,000 - \$6,300,000)
NF = \$6,300,000 + 0.95 (\$450,000)
NF = \$6,300,000 + \$427,500
NF = \$6,727,500
20X5 = \$6,727,500
Time Series Regression:
Computer Output
Constant = 4625000
Variable = 500000
R-Square = 0.95
Y = A + BX
Y = \$462,500 + \$500,000X
Y = \$462,500 + \$500,000 (5)
Y = \$462,500 + \$2,500,000
Y = \$7,125,000
20X5 = \$7,125,000
I choose to use the time series regression because it reveals that the expenses will continue to grow on 20X5 and the years after 20X5.
Exercise 9.3
Moving Expenses:
Fiscal Year Expenses
20X2 \$14,250,000
20X3 \$14,000,000
20X4 \$13,500,000
20X2-4 \$41,750,000
20X5 \$41,750,000/3 = \$13,916,667
Weighted Averages:
Fiscal Year Expenses Weight Weighted Score
20X2 \$14,250,000 x 1 = \$14,250,000
20X3 \$14,000,000 x 2 = \$28,000,000
20X4 \$13,500,000 x 3 = \$40,500,000 6 \$82,750,000
20X5 \$82,750,000/6 = \$13,791,667
Exponential Smoothing:
Given
The last forecasting (LF) = \$13,000,000, the last data (LD) = \$13,500,000, a = 0.95
I have used the 0.95 because I believe the new forecast will be based on the last data.
NF = LF + a (LD – LF)
NF = \$13,000,000 + 0.95 (\$13,500,000 - \$13,000,000)
NF = \$13,000,000 + 0.95 (\$500,000)
NF = \$13,000,000 + \$475,000
NF = \$13,475,000
20X5 = \$13,475,000
Time Series Regression:
Computer Output
Constant = 15750000
Variable = 750000
R-Square = 0.95
Y = A + BX
Y = \$15,750,000 + \$750,000X
Y = \$15,750,000 + \$750,000 (5)
Y = \$15,750,000 + \$3,375,000
Y = \$19,500,000
20X5 = \$19,500,000
I choose to use the time series regression because it reveals that the expenses will continue to grow on 20X5 and the years after 20X5.

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