Projecting Seasonal Sales using Time-Series Analysis

A financial analyst is conducting a time-series analysis of quarterly sales data for a retail company over the past five years. The analyst notes that the sales figures exhibit a strong seasonal pattern, with sales peaking during the holiday season in Q4 and dipping in Q1. To quantify this seasonality, the analyst decides to use a seasonal decomposition of time series (STL) approach, which separates the time series data into trend, seasonal, and residual components.

In the context of this analysis, the analyst has generated the following seasonal indices for each quarter:

• Q1: 0.8
• Q2: 1.0
• Q3: 1.2
• Q4: 1.5

The overall average sales per quarter for the analyzed period is $1,000,000. Based on this information, the analyst aims to project quarterly sales for the upcoming year. What would be the projected sales for Q4?

Use the seasonal indices provided for your calculation.