Question: Refer to Problem 16-30. a. Use the linear trend model (without transformation) for the first 15 months and provide a cash balance forecast for month

Refer to Problem 16-30.

a. Use the linear trend model (without transformation) for the first 15 months and provide a cash balance forecast for month 16. Then make the t2 transformation and develop a new linear trend forecasting model based on months 1–15.

Forecast the cash balance for month 16. Now compare the accuracy of the forecasts with and without the transformation. Which of the two forecast models would you prefer? Explain your answer.

b. Provide a 95% prediction interval for the cash balance forecast for month 16 using the linear trend model both with and without the transformation. Which interval has the widest width? On this basis, which procedure would you choose?

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