1. Develop an ARIMA model for sales tax revenue using the Box-Jenkins methodology.
2. Using your model, generate forecasts of revenue for the next 12 months. Append these forecasts to the end of the series, and plot the results. Are you happy with the pattern of the forecasts?
The City of College Station relies on monthly sales tax revenue to fund operations. The sales tax revenue generated accounts for approximately 44% of the total General Fund budget. It is important to be able to forecast the amount of sales tax revenue the city will receive each month from the state of Texas so that anticipated expenditures can be matched with projected revenue.