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

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

3. Option 1: Purchase Base MSRP: $25,120 Base MSRP: $25,120 Finance term: 48 months Finance term: 48 months Very good credit: 8.5% Very good credit: 8.5% $4000 down payment $4000 down payment Salvage Value: 14,500 Salvage Value: 14,500 Monthly payments: $520.57 Monthly payments: $520.57 Option 2: Lease $4,000 down payment $4,000 down payment Lease term: 48months Lease term: 48months Mileage option: 15,000 mi/yr Mileage option: 15,000 mi/yr Salvage Value: $0.00 Salvage Value: $0.00 Monthly payment: $367.00 Monthly payment: $367.00

4. Annual Worth Analysis Buy Cash Flow N = 48 $ 4,000 A =877.12 S =$ 0.00 N = 48 $ 4,000 A =776.67 S 14,500 Lease Cash Flow A consists of: A consists of: –Monthly Payments –Maintenance ( oil changes) –Insurance –Repairs ( Tires, brakes) –Gasoline (Annual mileage/mpg) x gas price

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

6. Analysis Results Down payments varied from $3,000 to $10,000 Down payments varied from $3,000 to $10,000 Gas Prices Varied from $2.75- $5 Gas Prices Varied from $2.75- $5 Credit Rating from 8%-12% Credit Rating from 8%-12% Miles per Gallon from 16-24mpg Miles per Gallon from 16-24mpg

7. Annual Mileage Analysis Mileage from 12,000 to 20,000 Mileage from 12,000 to 20,000

8. Comparing Time Owned

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

10. Our Decision: MSRP: $25,120 MSRP: $25,120 Period: 4 Period: 4 Buy salvage value: $14,500 Buy salvage value: $14,500 Lease salvage value: $0.00 Lease salvage value: $0.00 Buy: $9,320.04 (EUAC) Buy: $9,320.04 (EUAC) Lease: $10,525.44 (EUAC) Lease: $10,525.44 (EUAC) Difference: $1205.4/yr Difference: $1205.4/yr Buying is a better choice because it has a lower Equivalent Uniform Annual Cost. Buying is a better choice because it has a lower Equivalent Uniform Annual Cost.

11. Advantages and Disadvantages of Leasing Advantages: Allows you to 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. Advantages: Allows you to 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. Disadvantages: Leasing vehicles have a yearly mileage limit, higher insurance rates and overall higher EUAC. Advantages: You can sell your car when you want to with no mileage restrictions. Also you can modify the car. Advantages: You can sell 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. Disadvantages: The vehicle may begin to break down, as the warranty will end. The car will begin losing more value in the end. Advantages and Disadvantages of Buying

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