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Team #5 Presentation

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.

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Team #5 Presentation

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

  2. 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

  3. MSRP- $20,145 Finance Term- 48 months 6.98% APR $3948.42 Down Payment Salvage Value-$9266.70 Monthly Payments- $412.96 $3948.42 Down Payment Lease Term- 48 months 7.24% APR Mileage Option- 15000mi/yr Salvage Value- 0 Monthly Payment- $222.10 Option 1- Purchase Option 2- Lease

  4. 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

  5. Buy Car Lease Car Cash Flows Diagram S=$9266.70 S=0 A=$222.10 A=$412.96 P=$3948.42 P=$3948.42 n=48 months i=.5638% n=48 months i=.5841%

  6. Buy EUMC Lease EUMC EUMC Diagram EUMC=$316.65 EUMC=$339.66 • Leasing option is a better deal • This is based on our criterion

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

  8. 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

  9. Analysis Results- Term

  10. Sensitivity Analysis Summarized

  11. 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

  12. Resources • “Auto Leasing vs. Loan Calculator.” Cars.com. Cars.com. 15 Nov. 2008 <http://www.cars.com/go/advice/financing/calc/loanLeaseCalc.jsp>. • “Auto Loans.” Bankrate.com. Cars.com. 15 Nov. 2008 <http://www.bankrate.com/crc/rate/auto_home.asp>. • “Leasing Basics.” Auto Leasing Resource Center. Leasetips.com. 14 Nov. 2008 <http://www.leasetips.com/leasing_basics.htm>. • Reed, Philip. “Calculate Your Own Lease Payment.” Leasing Tips. Edmunds.com. 14 Nov. 2008 <http://www.edmunds.com/advice/leasing/articles/48365/article.html>. • “Residual Values.” Cars.com. Cars.com. 15 Nov. 2008 <http://www.cars.com/go/alg/index.jsp?makename=Honda&modelname=CIVIC+SDN&year=2008>.

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