1. Team 2 Vinh Thu Lieu – Organizer Qi Xu – Summarizer Manuel Gutierrez – Techie

2. Scenarios Buying Vs. Leasing a Vehicle. BMW 3-Series 325Ci Convertible BMW 3-Series 325Ci Convertible Good Entry Level Sport Car Good Entry Level Sport Car Reliable Reliable Good Resale Value (approx. <= 70% ) Good Resale Value (approx. <= 70% ) Depending on the Used Cars Comfortable and Great Looking Car Comfortable and Great Looking Car MSRP: = $40,295 MSRP: = $40,295 Selling Price: = $36,750 Selling Price: = $36,750 What should he do?

3. Course of Action 1 Buying a Car: Buying a Car: Down Payment: $2500 Down Payment: $2500 Excellent Credit: ARP at 6.65% Excellent Credit: ARP at 6.65% - 3 Year fixed APR Performance Loan Monthly Payment: $1139 Monthly Payment: $1139

4. Course of Action 2 Leasing a Car: Leasing a Car: Annual mileage: 12,000 miles/year Annual mileage: 12,000 miles/year - 3 Year Terms Down Payment: $2500 Down Payment: $2500 Monthly Payment: $494 Monthly Payment: $494

5. Annual Worth Analysis n = 36 $ 2500 A = $1139 S = $24177 Buy Cash Flow Diagram n = 36 $ 2500 A = $494 S = $0 Lease Cash Flow Diagram BMW 3-Series 325Ci Convertible

6. Sensitivity Analysis Varies Down Payment Varies Down Payment Varies the Financial Period (Terms) Varies the Financial Period (Terms) Over Mileages Cost Over Mileages Cost Buying vs. Leasing Buying vs. Leasing

7. Down Payment Analysis

8. Financial Period and Mileage Analysis

9. Decision Down payment: $2500 (Selling Price: $36750) Down payment: $2500 (Selling Price: $36750) 3 years financing 3 years financing Keep the Car Keep the Car Total Cost: $40,999.10 (Buy) Total Cost: $42,763.70 (Lease) Don’t Keep the Car Don’t Keep the Car Total Cost: $14924.22 (Buy) Total Cost: $17780.80 (Lease) Difference: $2856.60 Difference: $2856.60 Buying is the best choice here Buying is the best choice here

10. Advantages and Disadvantages of Buying Advantages: can modify your car in whatever manner you choose, there are no mileage restrictions, You can drive as many miles, you have the flexibility of selling the car whenever you want Advantages: can modify your car in whatever manner you choose, there are no mileage restrictions, You can drive as many miles, you have the flexibility of selling the car whenever you want Disadvantages: As warranty expires and you experience mechanical problems with the vehicle, you're responsible for the repair costs. As vehicle gets older, you can expect to incur repair and maintenance costs, Cars depreciate in value while depleting your liquid cash in the process Disadvantages: As warranty expires and you experience mechanical problems with the vehicle, you're responsible for the repair costs. As vehicle gets older, you can expect to incur repair and maintenance costs, Cars depreciate in value while depleting your liquid cash in the process

11. Advantages and Disadvantages of Leasing Advantages: leasing provides an opportunity for people to drive more expensive vehicles for less money each month, leasing allows consumers to drive a new vehicle every few years, Leasing helps consumers avoid the hassles often associated with selling their used car to an independent third party or trading in their vehicle to a local dealer Advantages: leasing provides an opportunity for people to drive more expensive vehicles for less money each month, leasing allows consumers to drive a new vehicle every few years, Leasing helps consumers avoid the hassles often associated with selling their used car to an independent third party or trading in their vehicle to a local dealer Disadvantages: most vehicle leasing programs have a yearly mileage limit, leased vehicles usually require higher insurance limits, Lease contracts can be difficult Disadvantages: most vehicle leasing programs have a yearly mileage limit, leased vehicles usually require higher insurance limits, Lease contracts can be difficult

12. Resources http://www.nada.com/ ( Vehicles pricing, Tip and advising about lease vs. buy ) http://www.nada.com/ ( Vehicles pricing, Tip and advising about lease vs. buy ) http://www.nada.com/ www.bmwusa.com ( vehicles about the chosen car ) www.bmwusa.com ( vehicles about the chosen car ) www.bmwusa.com www.bmwusa.com http://forums.mwerks.com/zerothread?cmd=p rint&id=794813 ( formula for lease ) http://forums.mwerks.com/zerothread?cmd=p rint&id=794813 ( formula for lease ) http://forums.mwerks.com/zerothread?cmd=p rint&id=794813 http://forums.mwerks.com/zerothread?cmd=p rint&id=794813 Text Books (Present Worth Analysis) Text Books (Present Worth Analysis)