Student’s Name: Professor’s Name: Course Code: Date: Scenario Analysis: Cars Sold Apart from interest charged on loans when obtaining a car the finance manager should also consider other factors that are likely to affect the buyers’ willingness to buy the car dealer’s cars when predicting the future of his/her car sales. Some of the factors that the finance manager bear I mind 7 % interest charged rate is purely influenced by the current economic downturn. If the economy was doing fine we would have lowered the rate up to 3% and still generate adequate finances from the interest due to higher sales. But currently the buyers who are willing to buy our cars are limited. Work cited McEwan H. (2011).Car Buying Tips. London. Print. [...]
4-2 Scenario Analysis: Cars Sold (Please read attachments to see the questions that must be answererd below in cars sold document and follow guidelines and rubric). 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 Are there factors other than interest rate charged for a loan that the finance manager should consider in predicting future car sales? 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%. As finance manager, what reasons would you convey to the vice-president in recommending this forecasting model? 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? For additional details, please refer to the Scenario Analysis Guidelines and Rubric document in the Assignment Guidelines and Rubrics section of the course.