Consider a time series on the annual net income of Facebook (in millions of dollars) from 2007 through 20 1 3.38
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Using Excel’s line plot option, make a time plot. Describe the movement of the data over time. Would a linear trend model be appropriate? Explain.
Right click on any data point in the Excel plot and select the Add Trendline option. Fit the data to a quadratic model (that is, polynomial of order 2) and report the estimated model.
Now use Excel to fit an exponential trend model. Report the estimated model.
Based on Excel’s superimposed fits, which model visually appears to be a better fit? Explain.
Obtain the residuals for each of the fitted models and calculate MAD, MSE, and MAPE (see
Exercises 13.47,
13.48, and
13.49, page 694). Which model has better fit measures? Explain.