Question

t = 1 Yt = 7, t= 2 Yt= 12, t= 3 Yt=9, t = 4 Yt = 14, t = 5 Yt = 15 Develop the linear trend equation for this time series to 1 decimal point. Tt = ? + t = ?

Based on above what is the forecast for t= 6 to 1 decimal point ?

Answer 1

Solution:

We have to develop  the linear trend equation for the given time series.

Equation:

where

a = intercept and b = slope

Thus we need to make following table:

t	yt	t 2	t* yt
1	7	1	7
2	12	4	24
3	9	9	27
4	14	16	56
5	15	25	75

Thus

and

where

and

thus

Thus linear trend equation is given by:

We have to forecast for t= 6 using above equation.