Team 2ScenariosCourse of Action 1Course of Action 2Annual Worth AnalysisSensitivity AnalysisDown Payment AnalysisFinancial Period and Mileage AnalysisDecisionAdvantages and Disadvantages of BuyingAdvantages and Disadvantages of LeasingResourcesTeam 2Team 2Vinh Thu Lieu – OrganizerVinh Thu Lieu – OrganizerQi Xu – SummarizerQi Xu – SummarizerManuel Gutierrez – TechieManuel Gutierrez – TechieScenariosScenariosBuying Vs. Leasing a VehicleBuying Vs. Leasing a Vehicle..BMW 3-Series 325Ci Convertible BMW 3-Series 325Ci Convertible Good Entry Level Sport CarGood Entry Level Sport CarReliable Reliable Good Resale Value (approx. <= 70% )Good Resale Value (approx. <= 70% )Depending on the Used CarsDepending on the Used CarsComfortable and Great Looking CarComfortable and Great Looking CarMSRP: = $40,295MSRP: = $40,295 Selling Price: = $36,750Selling Price: = $36,750What should he do?What should he do?Course of Action 1Course of Action 1Buying a Car:Buying a Car:Down Payment: $2500Down Payment: $2500Excellent Credit: ARP at 6.65%Excellent Credit: ARP at 6.65%- 3 Year fixed APR Performance Loan- 3 Year fixed APR Performance LoanMonthly Payment: $1139Monthly Payment: $1139Course of Action 2Course of Action 2Leasing a Car: Leasing a Car: Annual mileage: 12,000 miles/yearAnnual mileage: 12,000 miles/year- 3 Year Terms- 3 Year TermsDown Payment: $2500Down Payment: $2500Monthly Payment: $494Monthly Payment: $494Annual Worth AnalysisAnnual Worth Analysisn = 36$ 2500A = $1139S = $24177Buy Cash Flow Diagramn = 36$ 2500A = $494S = $0Lease Cash Flow DiagramBMW 3-Series 325Ci BMW 3-Series 325Ci ConvertibleConvertibleSensitivity AnalysisSensitivity AnalysisVaries Down PaymentVaries Down PaymentVaries the Financial Period (Terms)Varies the Financial Period (Terms)Over Mileages Cost Over Mileages Cost Buying vs. LeasingBuying vs. LeasingDown Payment AnalysisDown Payment AnalysisFinancial Period and Mileage AnalysisFinancial Period and Mileage AnalysisDecisionDecisionDown payment: $2500 (Selling Price: Down payment: $2500 (Selling Price: $36750)$36750)3 years financing3 years financingKeep the Car Keep the Car Total Cost: $40,999.10 (Buy)Total Cost: $40,999.10 (Buy)Total Cost: $42,763.70 (Lease)Total Cost: $42,763.70 (Lease)Don’t Keep the CarDon’t Keep the CarTotal Cost: $14924.22 (Buy)Total Cost: $14924.22 (Buy)Total Cost: $17780.80 (Lease)Total Cost: $17780.80 (Lease)Difference: $2856.60Difference: $2856.60Buying is the best choice hereBuying is the best choice hereAdvantages and Disadvantages of Advantages and Disadvantages of BuyingBuying Advantages: can modify your car in whatever Advantages: can modify your car in whatever manner you choose , there are no mileage manner you choose , there are no mileage restrictions, You can drive as many miles, you have restrictions, You can drive as many miles, you have the flexibility of selling the car whenever you want the flexibility of selling the car whenever you want Disadvantages: As warranty expires and you Disadvantages: As warranty expires and you experience mechanical problems with the vehicle, experience mechanical problems with the vehicle, you're responsible for the repair costs. As vehicle you're responsible for the repair costs. As vehicle gets older, you can expect to incur repair and gets older, you can expect to incur repair and maintenance costs , Cars depreciate in value while maintenance costs , Cars depreciate in value while depleting your liquid cash in the processdepleting your liquid cash in the processAdvantages and Disadvantages of Advantages and Disadvantages of LeasingLeasingAdvantages: leasing provides an opportunity for Advantages: leasing provides an opportunity for people to drive more expensive vehicles for less people to drive more expensive vehicles for less money each month, leasing allows consumers to money each month, leasing allows consumers to drive a new vehicle every few years, Leasing helps drive a new vehicle every few years, Leasing helps consumers avoid the hassles often associated with consumers avoid the hassles often associated with selling their used car to an independent third selling their used car to an independent third party or trading in their vehicle to a local dealerparty or trading in their vehicle to a local dealer Disadvantages: most vehicle leasing programs Disadvantages: most vehicle leasing programs have a yearly mileage limit, leased vehicles usually have a yearly mileage limit, leased vehicles usually require higher insurance limits, Lease contracts require higher insurance limits, Lease contracts can be difficultcan be difficultResources Resources http://www.nada.com/http://www.nada.com/ ( Vehicles ( Vehicles pricing, Tip and advising about lease pricing, Tip and advising about lease vs. buy )vs. buy )www.www.bmwbmwusa.comusa.com ( vehicles about ( vehicles about the chosen car ) the chosen car ) http://forums.mwerks.com/zerothrhttp://forums.mwerks.com/zerothread?cmd=print&id=794813ead?cmd=print&id=794813 ( formula for lease ) ( formula for lease )Text Books (Present Worth Analysis)Text Books (Present Worth
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