SCENARIO 16-14
-Referring to Scenario 16-14, the best interpretation of the coefficient of X (0.117)in the
Regression equation is:
A) the quarterly compound growth rate in contracts is around 30.92%.
B) the annually compound growth rate in contracts is around 30.92%.
C) the quarterly compound growth rate in contracts is around 11.7%.
D) the annually compound growth rate in contracts is around 11.7%.

Question

SCENARIO 16-14 
-Referring to Scenario 16-14, the best interpretation of the coefficient of X (0.117)in the
Regression equation is:
A) the quarterly compound growth rate in contracts is around 30.92%. 
B) the annually compound growth rate in contracts is around 30.92%. 
C) the quarterly compound growth rate in contracts is around 11.7%. 
D) the annually compound growth rate in contracts is around 11.7%.

Quizplus · Accepted Answer

The coefficient of X (0.117) represents the quarterly compound growth rate in contracts. To calculate the annually compound growth rate, we need to raise the quarterly rate to the power of 4 (since there are 4 quarters in a year). Therefore, the annually compound growth rate is 0.117^4 = 0.3092, or around 30.92%.

SCENARIO 16-14 -Referring to Scenario 16-14, the Best Interpretation of the Coefficient