1) Value line estimates of sales and earnings growth for individual companies are derived by correlating sales, earnings, and dividends to suitable components of National Income Accounts capital spending, Jason Black, the analyst for Value Line is examining trend of the capital spending variable from 1977 to 1993. Data are given below in table:

a) Plan data and find out the suitable trend model for the years 1977 to 1993.

b) If the suitable model is linear, find out linear trend model for the years 1977 to 1993.

TABLE CAPITAL SPENDING(BILLIONS),1977-1993

YEAR   BILLION  YEAR  BILLION  YEAR  BILLION
1977   214       1983     357        1989  571
1978   259       1984     416        1990  578
1979   303       1985     443        1991  556
1980   323       1986     437        1992  566
1981   369       1987     443        1993  623
1982   367       1988     545        1994  680(estimate)

c) Determine the average increase in capital spending per year been since 1977?

d) Evaluate the trend value for capital spending in 1994?

e) Evaluate your trend estimate with Value Line’S.

f) prepare down the factor which influence trend of capital spending?