Team #5 Presentation Juan Hernandez- Organizer Sean Guyer- Summarizer Trevor Tran- Techie Jesus Rovira- Techie

Our Situation 24 year old engineer Good driving record 48 month term 60k salary a year 15,000 miles/year 08 Honda Civic Sedan Ex Reliable Great on Gas Very Popular Car

Option 1- Purchase Option 2- Lease MSRP- $20,145 Finance Term- 48 months 6.98% APR $ Down Payment Salvage Value- $ Monthly Payments- $ $ Down Payment Lease Term- 48 months 7.24% APR Mileage Option mi/yr Salvage Value- 0 Monthly Payment- $222.10

Assumptions Buying Car  Sell car at the end of loan  MSRP is negotiable  Full purchase tax is added to loan Leasing Car  Trade car in at the end of lease  Maintenance and Insurance will be the same

Cash Flows Diagram Buy Car Lease Car P=$ A=$ A=$ S=0S=$ n=48 months i=.5638% n=48 months i=.5841%

EUMC Diagram Buy EUMC Lease EUMC EUMC=$ EUMC=$  Leasing option is a better deal  This is based on our criterion

Sensitivity Analysis Down Payment Term of Lease Term of Purchase Salvage Value MARR Releasing New Car With Same Initial MSRP

Assumptions-Sensitivity Analysis Buying  Insurance cost will drop as car depreciates  Maintenance will increase as ownership term increases  The offset between money saved on insurance and money spent on maintenance will be negligible Leasing  Insurance and Maintenance will remain the same

Analysis Results- Term

Sensitivity Analysis Summarized

Conclusion NO Money Down does not really effect the EUAC of the loans much, however it increases the EUAC of the lease options. By increasing the MARR you increase both the EUAC for the loans and the EUAC for the leases. Also Note that by increasing the MARR the loan EUAC lines separate making the longer term loan more appealing. So if you think you can get more for your money decrease your payments. Leasing is better when ownership is below 66 months After 66 months of ownership buying becomes the best option

Resources “Auto Leasing vs. Loan Calculator.” Cars.com. Cars.com. 15 Nov “Auto Loans.” Bankrate.com. Cars.com. 15 Nov “Leasing Basics.” Auto Leasing Resource Center. Leasetips.com. 14 Nov Reed, Philip. “Calculate Your Own Lease Payment.” Leasing Tips. Edmunds.com. 14 Nov “Residual Values.” Cars.com. Cars.com. 15 Nov