Chapter 16, Problem 62PS

The data in the following table, stored in McDonalds, represent the gross revenues (in billions of current dollars) of McDonald's Corporation from 1975 through 2012:

a. Plot the data.

b. Compute the linear trend forecasting equation.

c. Compute the quadratic trend forecasting equation.

d. Compute the exponential mend forecasting equation.

e. Determine the best-fitting autoregressive model. using $\alpha =\mathrm{0.05.}$

f. Perform a residual analysis for each of the models in (h) through (e).

g. Compute the standard error of the estimate $\left(S_{YX}\right)$ and the MAD for each corresponding model in (f).

h. On the basis of your results in (f) and (g). along with a consideration of the principle of parsimony, which model would you select for purposes of forecasting? Discuss.

i. Using the selected model in (h), forecast gross revenues for 2013.