Team 4 Lease or Buy A Car Nhu

Team 4 Lease or Buy A Car Nhu Nguyen – Techie Brent Demers – Summarizer Keng Chon Sit - Summarizer Ramon Valdez - Organizer

Situation: To Lease or Buy 2008 BMW 328 i Sedan n Spacious, Sporty and Luxurious EPA fuel economy estimates 19 -21 MPG city, 27 -30 highway. MSRP: $34, 216 n Miles Driven: 10, 000 per years n Down Payment: $2, 900 n Duration: 3 years or 36 months n Insurance: 156. 44 per month n Maintained and repair cost

LEASE or Buy continue. Variables: n Lease: – Payment period: $369 – Down Payment: $2500 + $400 security deposit = $2900 n Buy: – Interest rate: 3. 9% – Depreciation rate: 9. 35% – Payment period: $881

Assumption n n Lease and buy: – Every 15, 000 miles or 16 months: maintained service is require (explain) = $150 – Every 3, 000 - 4, 000 miles: maintain is require (oil change) = $30 – Every 10, 000 miles or 12 months: small repair require (windshield wiper) = $20 – Every 20, 000 miles: Change break pad 150 x 4 = $600 – Tire will not be change: n Car not run over 35, 000 miles Buy: – sale the car in 3 years

Assumption Continue n Insurance for Lease and Buy: – 2008 BMW 328 i Sedan – Engineer – single – City Pomona – dob : 1985 – Year first licensed : 16 yrs old – No accident or violation

Monthly Worth Analysis Buy Cash Flow Lease Cash Flow Salvage value=$25, 487. 82 A=$1, 167. 88 n = 36 $2, 900. 00 Salvage value = $0 $2, 900. 00 A=$ 655. 89 A is the avg. monthly Cash Flow of the following: Monthly Payments Maintenance Services Insurance Repair (s) Gasoline n =36

Total Cost Graph up to 36 months n Total Cost For every 6 months

Sensitivity Analysis: Annual Mileage + Penalties Buy: No penalties Lease: Over 10, 000 mi/year +$. 20 per mile

Sensitivity Analysis: Down Payment & Credit Rating n n The Lease payment is constant $379 while the down payment influences the buy payment Credit Rating: Will effect payment for Buying

Sensitivity Analysis: Time Owned & Salvage Cost Lease is better choice for 1 - 3 years. Buy is what the time owned factor favors.

Conclusion: Benefits n Total cost for 3 years: n Lease: $19880. 43 n Buy: $19456. 05 – Have salvage value n Short Term Goal (1 – 3 years): – Leasing n Long – Buy Term Goal (3 years or more):

Resources n n BMW in Monrovia: Interview a Dealership sale person through phone: Roberto 626 358 4269 http: //www. bmwusa. com/Standard/Content /Financial. Services/Financing. Offer/Default. as px? enc=l. Th/Ot. FZJYyyy. Ri 1 s. Aj 9 Rg Kelly Blue Book www. aaa. com (insurance)