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 328i Sedan Spacious, Sporty and Luxurious Spacious, Sporty and Luxurious EPA fuel economy estimates EPA fuel economy estimates MPG city, highway MPG city, highway. MSRP: $34,216 MSRP: $34,216 Miles Driven: 10,000 per years Miles Driven: 10,000 per years Down Payment: $2,900 Down Payment: $2,900 Duration: 3 years or 36 months Duration: 3 years or 36 months Insurance: per month Insurance: per month Maintained and repair cost Maintained and repair cost

LEASE or Buy continue. Variables: Lease: Lease: –Payment per period: $369 –Down Payment: $ $400 security deposit = $2900 Buy: Buy: –Interest rate: 3.9% –Depreciation rate: 9.35% –Payment per period: $881

Assumption Lease and buy: Lease and buy: –Every 15,000 miles or 16 months: maintained service is require (explain) = $150 –Every 3, ,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 150x4 = $600 –Tire will not be change: Car not run over 35,000 miles Car not run over 35,000 miles Buy : Buy : –sale the car in 3 years

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

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

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

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

Sensitivity Analysis: Down Payment & Credit Rating The Lease payment is constant $379 while the down payment influences the buy payment The Lease payment is constant $379 while the down payment influences the buy payment Credit Rating: Will effect payment for Buying 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. Lease is better choice for 1- 3 years. Buy is what the time owned factor favors.

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

Resources BMW in Monrovia: Interview a Dealership sale person through phone: BMW in Monrovia: Interview a Dealership sale person through phone:Roberto /FinancialServices/FinancingOffer/Default.as px?enc=lTh/OtFZJYyyyRi1sAj9Rg /FinancialServices/FinancingOffer/Default.as px?enc=lTh/OtFZJYyyyRi1sAj9Rg /FinancialServices/FinancingOffer/Default.as px?enc=lTh/OtFZJYyyyRi1sAj9Rg /FinancialServices/FinancingOffer/Default.as px?enc=lTh/OtFZJYyyyRi1sAj9Rg Kelly Blue Book Kelly Blue Book (insurance) (insurance)