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...
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In other words, these companies expand their business, reach a peak in their business activity, and then go through a period of recession, followed by a period of business expansion, and so on. It is important that companies understand that the economic sector they represent follows the same business cycle. Therefore, it is difficult for companies to expand their business during periods of recession in the economic sector they represent.
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
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