Team 5 Presentation Buy or Lease a Car

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Team #5 Presentation Buy or Lease a Car Organizer- Kenny Klingaman Techie- Rolando Arevalo

Team #5 Presentation Buy or Lease a Car Organizer- Kenny Klingaman Techie- Rolando Arevalo Summarizer- Elizabeth Young

Our Situation: Buy or Lease • Chrysler 300 Reliable & safe – High quality

Our Situation: Buy or Lease • Chrysler 300 Reliable & safe – High quality – Good gas mileage – Spacious • • • Single 24 year old male engineer renting in La Verne Annual Salary of $60, 000 Good driving record and driving for 8 years Good Credit 15, 000 miles/ year

Option 1: Purchase Option 2: Lease • Base MSRP: $25, 120 • $4, 000

Option 1: Purchase Option 2: Lease • Base MSRP: $25, 120 • $4, 000 down • Finance term: 48 • • • months Very good credit: 8. 5% $4000 down payment Salvage Value: 14, 500 • Monthly payments: $520. 57 • • payment Lease term: 48 months Mileage option: 15, 000 mi/yr Salvage Value: $0. 00 Monthly payment: $367. 00

Annual Worth Analysis Buy Cash Flow Lease Cash Flow S 14, 500 A =776.

Annual Worth Analysis Buy Cash Flow Lease Cash Flow S 14, 500 A =776. 67 S =$ 0. 00 N = 48 A =877. 12 N = 48 $ 4, 000 • A consists of: – – – Monthly Payments Maintenance ( oil changes) Insurance Repairs ( Tires, brakes) Gasoline (Annual mileage/mpg) x gas price

Sensitivity Analysis • Buying or Leasing • Various Down Payment • Various Annual Mileage

Sensitivity Analysis • Buying or Leasing • Various Down Payment • Various Annual Mileage • Comparing 3, 4, 5 years • Mpg • Credit Rating • Gas Prices

Analysis Results • Down payments varied from $3, 000 to $10, 000 • Gas

Analysis Results • Down payments varied from $3, 000 to $10, 000 • Gas Prices Varied from $2. 75 - $5 • Credit Rating from 8%-12% • Miles per Gallon from 16 -24 mpg

Annual Mileage Analysis • Mileage from 12, 000 to 20, 000

Annual Mileage Analysis • Mileage from 12, 000 to 20, 000

Comparing Time Owned

Comparing Time Owned

Adjusting Salvage Value At just under $8000 we reach the same EUC as it

Adjusting Salvage Value At just under $8000 we reach the same EUC as it was for a four year lease.

Our Decision: • MSRP: $25, 120 • Period: 4 • Buy salvage value: $14,

Our Decision: • MSRP: $25, 120 • Period: 4 • Buy salvage value: $14, 500 • Lease salvage value: $0. 00 • Buy: $9, 320. 04 (EUAC) • Lease: $10, 525. 44 (EUAC) • Difference: $1205. 4/yr • Buying is a better choice because it has a lower Equivalent Uniform Annual Cost.

Advantages and Disadvantages of Leasing Advantages and Disadvantages of Buying • Advantages: Allows you

Advantages and Disadvantages of Leasing Advantages and Disadvantages of Buying • Advantages: Allows you to • Advantages: You can sell continuously drive new cars, while having a less monthly payment. Also, leasing allows you not to hassle with selling your car and possibility of tax reduction. • Disadvantages: Leasing vehicles have a yearly mileage limit, higher insurance rates and overall higher EUAC. your car when you want to with no mileage restrictions. Also you can modify the car. • Disadvantages: The vehicle may begin to break down, as the warranty will end. The car will begin losing more value in the end.

References • www. kbb. com (Vehicle salvage value, advice • • • about lease

References • www. kbb. com (Vehicle salvage value, advice • • • about lease vs. buy) www. chryslerfinancial. com (Vehicle car pricing information) www. consumerguide. com (More advice about lease vs. buy) www. progressive. com (insurance quotes) Personal Experience Text (Annual Worth Analysis)