Scenario Analysis - Car Sold

Anonymous
timer Asked: Apr 25th, 2017

Question description

A finance manager employed by an automobile dealership believes that the number of cars sold in his local market can be predicted by the interest rate charged for a loan.

Interest Rate (%)

Number of Cars Sold (100s)

3

10

5

7

6

5

8

2


The finance manager performed a regression analysis of the number of cars sold and interest rates using the sample of data above. Shown below is a portion of the regression output.

Regression Statistics

Multiple R

0.998868

R2

0.997738

Coefficient

Intercept

14.88462

Interest Rate

-1.61538

Specially, the following critical elements must be addressed;

Main elements:

Are there factors other than interest rate charged for a loan that the finance manager should consider in predicting future car sales?

Integration and Application:

Is interest rate charged for a loan the most important factor to be considered in predicting future car sales? Explain your reasoning.

The dealership’s vice-president of marketing has requested a sales forecast at the prevailing interest rate of 7%.

Analysis:

As finance manager, what reasons would you convey to the vice-president in recommending this forecasting model?

Critical Thinking

Is the prediction of car sales at 7% a reflection of the current downturn in the economy? How might this impact the dealership’s business?

Analysis of this scenario should be 1-2 page Microsoft word document with double spacing and 12 point Times New Roman font

Studypool has helped 1,244,100 students
flag Report DMCA
Similar Questions
Hot Questions
Related Tags
Study Guides

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors