Economic Comparison: Honda Accord vs. Toyota Prius

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Presentation transcript:

Economic Comparison: Honda Accord vs. Toyota Prius Team 3 Richard Do Peter Jo Lester Oestreich Carlos Ruiz Jane Veerachanavirut

Objective What car is a better deal in a 5-year period? Honda Accord 2003 Toyota Prius 2003

Analysis Parameters Gender: Male Finance/Lease Term: 4 Years Age: 25 APR 8.90% Residence: Pomona, CA Warranty 3 Years Education: BS Engineering Analysis Term 5 Years Credit Score: Good Insurance Coverage 100,000/300,000 Salvage Condition Insurance Term 1 year Down Payment: 10.00% Miles Driven per year 15000.000

Economic Analysis Parameters Financing Major Maintenance Insurance Salvage Value Gas Costs Scheduled/Minor Maintenance License and Registration Fee

Economic Analysis Method Net Present Worth and Equivalent Uniform Cost NPW=PW of cost – PW of benefits EUC = P(A/P, i, n) - S(A/F, i, n) 5-year Analysis Term Minimum Attractive Rate of Return 10% Sensitivity Analysis

Initial Analysis Results Toyota NPW $48,305.09 EUC $1,026.34 Honda NPW $43,208.82 EUC $918.06

Sensitivity Analysis Factors affecting NPW APR Insurance Gas Inflation Downpayment Analysis Term

Conclusion Honda Accord is the better buy based on: Initial economical analysis. Sensitivity analysis. High maintenance cost of Toyota Prius offsets the savings of its fuel consumption. References: Toyota.com Honda.com KBB.com Consumerreports.com Eia.doe.gov

Useful Resources Bankrate.com – www.bankrate.com Offers current information on the best APR for each loan term new and used Information on auto loans in general, credit score, buying Car Buying Guides Offers a variety of calculators on How much you can afford? New or Used? Buy or Lease? Car Buying Tips - http://www.carbuyingtips.com/ Credit Reports, Car Loans, Quotes, and Warranty Information Information on Financing, Lease, New, Used Information on how to avoid fraud and current scams Information on car insurance