Companies in the U.S. car rental market vary greatly in terms of the size of the fleet, the number of locations, and annual revenue. In 2011Hertz had 320,000 cars in service and annual revenue of approximately S4.2 billion.The following data sho\v the number of cars in service {1000s) and the annual revenue ($ millions) for sLx smaller car rental companies (4uto Rental News website, August 7, 2012).   Company Cars (1000s} Revenue ($million) U-SaveAuto Rental System, Inc. 11.5 118 Payless Car Rental System,Inc. 10.0 135 ACERent A Car 9.0 100 Rent-A-Wreck of America 5.5 37 Triangle Rent-A-Car 4.2 40 Affordable/Sensible S.3 32   a. Develop a scatter diagram \vith the number of cars in service as the independent variable. b. Wnat does the scatter diagram developed in part (a) indicate about the relationship between the two variables? c. Use the least squares method to develop the estimated regression equation. d. For every additional car placed in service, estimate bo\v much annual revenue ''will change. e. Fox Rent A Car has 11,000 cars in service. Use the estimated regression equation developed in part (c) to predict annual revenue for Fox Rent A Car.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Companies in the U.S. car rental market vary greatly in terms of the size of the fleet, the number of locations, and annual revenue. In 2011Hertz had 320,000 cars in service and annual revenue of approximately S4.2 billion.The following data sho\v the number of cars in service {1000s) and the annual revenue ($ millions) for sLx smaller car rental companies (4uto Rental News website, August 7, 2012).

 

Company

Cars (1000s}

Revenue ($million)

U-SaveAuto Rental System, Inc.

11.5

118

Payless Car Rental System,Inc.

10.0

135

ACERent A Car

9.0

100

Rent-A-Wreck of America

5.5

37

Triangle Rent-A-Car

4.2

40

Affordable/Sensible

S.3

32

 

a. Develop a scatter diagram \vith the number of cars in service as the independent variable.

b. Wnat does the scatter diagram developed in part (a) indicate about the relationship between the two variables?

c. Use the least squares method to develop the estimated regression equation.

d. For every additional car placed in service, estimate bo\v much annual revenue ''will change.

e. Fox Rent A Car has 11,000 cars in service. Use the estimated regression equation developed in part (c) to predict annual revenue for Fox Rent A Car.

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