# Busi. 410 HW 5 Answers - P roblem 1 Starbucks a Equation...

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Problem 1: Starbucks a) Equation: Starbucks Rev. (B\$) = -.17 + .95*(China GDP t-3) + 1.64*(Starbucks Rev. t-3) RSquare: .997 Significant at: .001 b) The China GDP figure (lagged 3 years) causes the “predicted revenues” value to increase by .95*China GDP (t-3). The Starbucks Rev. figure (lagged 3 years) causes the “predicted revenues” value to increase by 1.64*Starbucks Rev. (t-3). c) Since RSquare is .997, 99.7% of the variation in Starbucks Rev. is accounted for by my model. This is significant. d) MOE: .290 e) 2007: Predicted Rev. = 9.69 (B\$); Lower 95% = 9.40; Upper 95% = 9.98 2008: Predicted Rev. = 11.62 (B\$); Lower 95% = 11.33; Upper 95% = 11.91 2009: Predicted Rev. = 14.17 (B\$); Lower 95% = 13.88; Upper 95% = 14.46 f) Since the “predicted rev.” for 2009 is above \$13 billion, and the lower 95% boundary is as well, it is very reasonable to expect Starbucks to achieve its claim of \$13 billion in 2009 by.

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Busi. 410 HW 5 Answers - P roblem 1 Starbucks a Equation...

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