Learning model be adopted for budgeting-financial management

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A project has an actual first unit cost of $72.8 million. Four additional and similar units are to be financed by bank loans and constructed in sequential fashion. The bankers are anxious that a learning model be adopted for budgeting and financial management. Based on other related experiences, the bankers insist that costs follow the 93.7% learning model. Determine a table of unit, cumulative, and average costs for the next four projects. REGRESSION, FORECASTING, CONFIDENCE INTERVAL, and CORELATION An important product is cost sampled for significant components and over the years a product index is faithfully calculated. The following is the table of indexes. Year Product Index, y 0 95.1 1 97.7 2 98.4 3 100.0 4 101.1 5 102.2 6 103.5 7 104.9 8 106.6 9 109.7 (a) Determine the values of parameters a and b of the linear regression equation using the method of least squares. (b). Find the 95% prediction interval for the year-10 value (use 1.96). (d). The product cost for year 9 is $17,500 per unit. Find the expected cost for year 10. (d). Determine the coefficient of correlation, r. What can you say about the strength of the prediction of the cost range?

Reference no: EM13961062

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