Substituting the 1-period lagged data from 2004.4 and the 4-period lagged data from 2004.1 into the model formula, change in warranty expense is predicted to be higher than 2004.4.
11.73 =-0.7 - 0.07*24+ 0.83*17.
The expected warranty expense is (53 + 11.73) = $64.73 million
