Scenario Analysis: Cars Sold

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?