NVIDIA Corp. Income Statements are presented below. Analysts forecast that its 2018 sales will be $8,260. The expected 2018 tax rate will be 17.35%.

1) Assume cost of goods sold, research and development, and other SG&A expenses are a function of time (year). Use the Trend function to forecast cost of goods sold, research and development, and Other SG&A expenses (on years). Use your judgement to forecast other items on the income statement (e.g., keep the same as previous year).

2) Create a scatter chart of cost of goods sold (y-axis) vs. sales (x-axis) for year 2012-2017 and add a linear trend line for 2018. Does there appear to be a consistent trend in this relationship?

3) Use the regression tool to verify your results from part 2). Is the trend statistically significant at 95% level?

F G H C D E NVIDIA Corporation Income Statement ($ in Millions) For the Years 2012 to 2017 Jan-18* Jan-17 Jan-16 Jan-15 6,910 5,010 4,682 2,648 2,002 1,862 4,262 3,008 2,820 1,463 1,331 1,360 641 532 443 187 197 220 O 0 1.971 796 43 47 46 56 201 1,907 743 239 1,668 614 631 Jan-14 4,130 1.623 2,507 1,336 436 Jan-13 4,280 1,828 2,453 1,147 431 226 Jan-12 3,998 1,743 2,255 984 398 204 239 0 948 5 Sales 6 Cost of Goods Sold 7 Gross Income 8 Research & Development 9 Other SG&A 10 Depreciation Expense 11 Other Operating Expense 12 EBIT (Operating Income) 13 Nonoperating Income - Net 14 Interest Expense 15 Unusual Expense - Net 16 Pretax Income 17 Income Taxes 18 Net Income 19 20 Tax Rate 496 648 669 50 42 24 58 10 0 510 mo 37 0 662 663 755 124 129 70 100 82 440 563 581 17.35% 12.55% 17.36% 16.46% 13.77% 15.03% 12.41% 21 22 * Forecast 23 24 25 2018 Revenue Forecast 26 2018 Tax Rate Forecast 8260 17.35%