The IRS is actively encouraging individuals to file their taxes electronically in order to increase accuracy and reduce expenses. The following data show the percentage of tax re-turns filed electronically from 2003 to 2012. These data can also be found in the Excel file electronic filing.xlsx.

a. Forecast the percentage of tax returns that will be electronically filed for 2013 using exponential smoothing with α = 0.4.
b. Calculate the MAD for the forecast in part a.
c. Forecast the percentage of tax returns that will be electronically filed for 2013 using exponential smoothing with trend adjustment. Set α = 0.4 and β = 0.6.
d. Calculate the MAD for the forecast in part c.
e. In which forecast do you have the most confidence? Why?

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Year Percentage 2003 2004 2005 2006 2007 Year Percentage 2008 2009 2010 2011 2012 40 47 51 54 57 58 67 70 78