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The Municipal Government has asked you to forecast the sales tax revenue it will collect...

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Finance

The Municipal Government has asked you to forecast the sales tax revenue it will collect in 2017, 2018 and 2019. Data on revenue in recent years is presented below.

Year

Q1

Q2

Q3

Q4

TOTAL

2012

695

788

809

1,302

$3,594

2013

896

941

1,018

1,677

$4,532

2014

1,037

929

1,353

2,090

$5,409

2015

1,067

1,081

1,574

2,143

$5,865

2016

1,147

1,161

1,683

2,372

$6,362

*In thousands

You see an upward trend in the data, and you decide to try the moving average method or regression models to develop your forecast.

a. Estimate annual sales tax revenue for 2017, 2018 and 2019 using a moving average 3-day (MA3) model. Please clearly show the process you use to come up with your estimates. (5 points)

b. Estimate annual sales tax revenue for 2017, 2018 and 2019 using a moving average 4-day (MA4) model. Please clearly show the process you use to come up with your estimates. (5 points)

c. Using one of the methods, forecast the quarterly sales tax revenue for 2017. Clearly show the process you use to come up with your estimates. (Hint: consider average or moving average by quarter, or ratio / percent.) (5 points)

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