0.997738 Coefficient Intercept Interest Rate -1.61538 14.88462 1. Are there factors other than interest rate charged for a loan that the finance manager should consider in predicting future car sales? 2. 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%. 3. As finance manager, what reasons would you convey to the vice-president in recommending this forecasting model? 4. 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?
0.997738 Coefficient Intercept Interest Rate -1.61538 14.88462 1. Are there factors other than interest rate charged for a loan that the finance manager should consider in predicting future car sales? 2. 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%. 3. As finance manager, what reasons would you convey to the vice-president in recommending this forecasting model? 4. 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?
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter4A: Problems In Applying The Linear Regression Model
Section: Chapter Questions
Problem 1E
Related questions
Question
![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
5
10
7
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 R0.998868
R2
0.997738
Coefficient
|14.88462
Interest Rate -1.61538
Intercept
1. Are there factors other than interest rate charged for a loan that the finance
manager should consider in predicting future car sales?
2. 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%.
3. As finance manager, what reasons would you convey to the vice-president in
recommending this forecasting model?
4. Isthe prediction of car sales at 7% a reflection of the current downturn in the
economy? How might this impact the dealership's business?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4004a21c-95db-461c-a494-ebcb7bcef93f%2Fd125e11b-fbe0-45f7-808b-f946fe06981e%2Fj717luf_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
5
10
7
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 R0.998868
R2
0.997738
Coefficient
|14.88462
Interest Rate -1.61538
Intercept
1. Are there factors other than interest rate charged for a loan that the finance
manager should consider in predicting future car sales?
2. 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%.
3. As finance manager, what reasons would you convey to the vice-president in
recommending this forecasting model?
4. Isthe prediction of car sales at 7% a reflection of the current downturn in the
economy? How might this impact the dealership's business?
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