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# Seasonal Index and Regression Models

Quarterly billing for water usage is shown below.

Year
Quarter 1 2 3 4
Winter 64 66 68 73
Spring 103 103 104 120
Summer 152 160 162 176
Fall 73 72 78 88

a. Find the seasonal index for each quarter.
b. Deseasonalize the data.
c. Find the trend line.
d. Assume there is no cyclical component (don't forget: there IS a seasonal component). Forecast the summer billing for year 5.

2. The following table shows the annual maintenance costs for several cars, as well as their age.

age of car annual expenses (\$)
1 100
2 375
2 325
3 455
3 520
4 485
4 530
5 595
5 515
6 700
6 800
7 1000
7 950

What would a regression model that relates maintenance costs (dependent variable) as a function of age (independent variable) predict the annual cost of maintaining an eight-year-old car to be?

#### Solution Summary

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