Assignment 4-2
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Jan 9, 2024
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Uploaded by MinisterFlower8309
Jasmine Allen
Southern New Hampshire University
QSO 510
Dr. Thomas Knopp
Assignment 4-2
February 26
th
, 2023
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
R
2
0.997738
Coefficient
Intercept
14.88462
Interest Rate
-1.61538
1.
Are there factors other than interest rate charged for a loan that the finance manager should consider in predicting future car sales?
The closer an R square value is to 1, the more accurate the model. In this particular scenario, the R square value is 0.998, which is extremely close to 1. Knowing this information, the finance manager should not need to consider any other factors besides the interest rate charged for a loan 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%.
The interest rate charged for a loan is indeed the most important factor in predicting future car sales. This is due to the R square value being so close to 1. 2
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