Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
Car Sales and Interest Scenario Analysis
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. The finance manager performed a regression analysis of the number of cars sold and corresponding interest rates and identified a direct correlation, with fewer cars sold as the interest rates increased. This case study assesses whether there are other salient factors besides interest rates should be taken into account in this regression analysis, and whether the interest rate charged for a loan is the most important factor. A discussion concerning how a finance manager would respond to the dealership's vice president of marketing's request for a sales forecast at the prevailing rate of 7% is followed by an analysis concerning whether the prediction of car sales at 7% interest is a reflection of the current downturn in the economy and its potential implications for the dealership.
Are there factors other than interest rate charged for a loan that the finance manager should consider in predicting future car sales?
At present, there are a number of trends that will inevitably affect new car sales levels for the foreseeable future, including the following factors:
The vast new popularity...
51).
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%.
At a prevailing interest rate of 7%, the finance manager's regression analysis indicates that between 300 and 400 cars will be sold (the time frame for car sales is unspecified in the regression model).
As finance manager, what reasons would you convey to the vice-president in recommending this forecasting model?
While there are other factors involved in the decision to purchase a new vehicle, the regression model is clear evidence that higher interest rates result in fewer sales, with the 7% interest rate being near the top…
References
For auto finance specialists it's a whole new ball game. (2009, April). ABA Banking Journal, 89(4), 50-53.
Parkinson, D. & Blackwell, R. (2015, January 23). The 7-year slump: Why the global economy can't seem to get started. The Globe and Mail. Retrieved from http://www.the globeandmail.com/report-on-business/the-7-year-slump-why-the-global-economy-cant-seem-to-get-started/article22611665/.
Strauss, W. A. & Engel, E. A. (2008, August). Economy in lower gear through 2008. Chicago Fed Letter, 253a, 1-4.
This does not compare favorably to the near-half value of the trade in with a cash purchase. A purchase financed through a bank or other lender will be treated by the dealership as a cash purchase, and the car can be obtained for the same price. Assuming a standard down payment of ten percent ($1,600) and an interest rate of 3.5% (.25% above prime) over 36 months, the total cost
Interest and Loan MM255 UNIT 4 ASSIGNMENT The price of the used car is $18,700 and the down payment amount is $2,350. This implies that the amount to be financed is $16,350, that is the price of the car less the down payment. The car is intended to be financed over a period of 36 months and the monthly instalment is $516.95 for every month. Therefore, the total instalment amounts is $18,610.20,
Woolworth LIMITED Business Strategy Reprot Background to Company Woolworth Limited is the food and takeaway liquor retailer in Australia, often colloquially known as "Woolies' and going by the slogan 'The fresh food people'. It operates in every Australian state and territory. Offshoots are Woolworth's online (Homeshop) which allows uses to purchase food over the Internet and Woolworth's Liquor a department of Woolworth's supermarket stores (IRIS Tasmania, November 2007). Challenges Woolworth Limited has to follow government
The former might be, 'What specific...' [while] Less structure might be exemplified by: "Please respond to the following in your own words: I....'" (Dereshiwsky, 1999) in addition: adding some open-ended items such as these to a more traditionally scaled quantifiable survey, such as one with Likert-scaled attitudinal items, and/or "check/off" questions on demographic background variables, is a good way to make the survey "multimethod" in nature. This is because you'd
The process would then need to continue so that the changes that can be seen in the environment can also affect the changes in entry strategies. Environmental factors, economic factors, political/legal factors, social/cultural factors and also technological factors should all be considered. The legal factors that need to be addressed include issues in employee law, monopolies and mergers legislation, environmental protection laws, and wider issues such as foreign trade regulations.
growth of the Korean automobile industry in the Unites States from a trade and finance perspective. Use eight sources of information. Korean Auto Industry Red To begin an investigation into the Korean automobile industry, we first have to start with some basic facts about the Korean Passenger car Industry. The South Korean auto industry is the second largest in Asia and has been one of the key growth industries, along with construction, shipping