2. Brent GroomDavid Tran Luu Tran

3. Presentation Topics Lease vs. Buy Comparison Sensitivity Analysis Decision Resources

4. Lease vs. Buy Comparison Basic Assumptions for 5 years: BuyingLeasing Car (2005)Camry LE V6 Down$5000 MilesN/A12,000 Credit720

5. Leasing vs. Buying Basic Research Results for the Toyota Camry V6 LE Price$22,500 Down Payment$4,700 Nominal interest6.07%

6. Leasing vs. Buying Basic Research Results: BuyingLeasing Monthly$387$252 Salvage$8,8000

7. Leasing vs. Buying Basic Calculated Results: BuyLease PMT$378$252 Future Value$32,815$25,015

8. Analysis BuyLease Re-paintYesNo PaymentHigherLower Mileage limitNoYes Salvage valueGet to keepno

9. Analysis Toyota Camry LE V6 Cash Flow Diagram Buying(cal) n = 60 $ 4,700 A = $378 S = $8,800 Leasing n = 60 $ 4,700 A = $252 S = $0

10. Sensitivity Analysis Variables: - Down Payment - Leasing term (n) - Mileage

11. Sensitivity Analysis Varying Down Payment Down Payment Buying PMT Leasing PMT 0$470$344 2500$421$295 4700$378$252

12. Sensitivity Analysis Varying term MonthBuyingLeasing 36$595$372 48$459$297 60$378$252

13. Sensitivity Analysis Varying the over mileages Mileages overCost/mileAdditional charge 1000$0.15$150 2000$0.15$300 3000$0.15$450

14. Decision Lease or buy, which one is better? - Lease allow lower monthly payment, always under warranty, and drive new car every 2 or 3 years. - Buy allow payment –free for a while, resale the car, and able to upgrade Secret price quote. Cost of the car that is below the dealer invoice

15. Decision Monthly cost analysis Using EUAC: Buying: $334 Leasing: $334 Another way of looking at it: BuyLeaseDifference Monthly Payment$378$252$126 Salvage$88000 In order to make $8800 in 60 months, need interest rate of.005058% or the nominal interest rate of 6.07%, which is the same as buying.

16. Leasing Formulas Residual = 60% *(MSRP) Net cap cost = Negotiate price - down Depreciation = (Net cap cost – residual) / n Finance =(Net cap cost + residual) * money factor PMT = Depreciation + Finance + Tax

17. Resources For new/used car comparison http://www.autos.yahoo.com For information how to lease or buy http://www.leaseguide.com For the Secret Price Quote http://www.carpricesecrets.com http://www.carpricesecrets.com For Salvalge value and car price: http://www.kbb.com// http://www.edmunds.com/ http://www.cars.com/go/index.jsp?aff=national http://www.leasecompare.com/

18. Car- Lease v.s Buy