QUESTION TWO

a)In the context of modeling, discuss the application of various financial models in business decision making (6 marks)

b)A restaurant in Kisumu City has recorded its weekly sales over a 5- month period as follows:

Sales in ksh'000'

Week-1

Week-2

Week-3

Week-4

JANUARY

2500

1750

1200

3100

FEBRUARY

2650

1800

1400

3350

MARCH

2800

2000

1500

3400

APRIL

2850

1950

1450

3650

MAY

2900

2050

1750

3800

Required:

i)Calculate the seasonal indices for each week using multiplicative index (4 Marks)

ii)Establish the trend line using ordinary least square (OLS) method(8 Marks)

iii)Using the trend in (ii) above, forecast the sales that the restaurant should make in week 2 of June (2 Marks)

(Total: 10 Marks)