The controller of a small construction company is attempting to forecast expenses for the next year. He collects quarterly data on expenses (in $1,000s) over the past five years, a portion of which is shown in the accompanying table.

a. Estimate a linear trend model with seasonal dummy variables and forecast expenses for all four quarters of 2018.

b. Estimate an exponential trend model with seasonal dummy variables and and forecast expenses for all four quarters of 2018.

c. Plot expenses over time to determine if the forecasts made with the linear or the exponential model are more suitable.

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Year 2008 Quarter Expenses 1 96.50 2008 54.00 22335.30 2017 4