Scenario Analysis - Car Sold

Anonymous

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

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