1.A State University Credit Union handles saving accounts and makes loans to members. In order to plan its investment strategies, the credit union needs to forecast monthly loan requests. Monthly Loan requests were recorded for the last 25 months and are presented in the table at the bottom of this Assignment.

Question 1 deals with the linear regression forecasting model.

1.1Obtain the regression equation to predict monthly loans. Write it down here.

1.2Can you argue with 5% significance level that linear trend is present in this time series? Why?

a.No. At 5% significance level there is insufficient evidence to make this argument

b.No. Significance level has nothing to do with trend.

c.Yes. R-sq is 78%.

d.The p- value is practically zero, so there is strong evidence for the presence of trend

1.3Use the estimated regression equation to make a forecast of the expected loan requests for each of the next three months (months 26, 27, and 28). Show your work with the regression equation.

1.4How much should the credit union prepare for each of the next three months (Months 26, 27, and 28), if it wants to be 95% confident it has prepared enough to meet the predicted loan requests?