Team 2
Vinh Thu Lieu – Organizer
Qi Xu – Summarizer
Manuel Gutierrez – Techie
Scenarios
Buying Vs. Leasing a Vehicle.

BMW 3-Series 325Ci Convertible
 Good Entry Level Sport Car
 Reliable
 Good Resale Value (approx. <= 70% )
Depending on the Used Cars
 Comfortable and Great Looking Car


MSRP: = $40,295
Selling Price: = $36,750
What should he do?
Course of Action 1
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Buying a Car:
Down Payment: $2500
Excellent Credit: ARP at 6.65%
- 3 Year fixed APR Performance Loan
Monthly Payment: $1139
Course of Action 2

Leasing a Car:
Annual mileage: 12,000 miles/year
- 3 Year Terms
Down Payment: $2500

Monthly Payment: $494


Annual Worth Analysis
BMW 3-Series 325Ci Convertible
Buy Cash Flow
Diagram
Lease Cash Flow Diagram
S = $0
S = $24177
A = $1139
$ 2500
n = 36
A = $494
$ 2500
n = 36
Sensitivity Analysis
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Varies Down Payment
Varies the Financial Period (Terms)
Over Mileages Cost
Buying vs. Leasing
Down Payment Analysis
Financial Period and Mileage Analysis
Decision
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Down payment: $2500 (Selling Price: $36750)
3 years financing
Keep the Car
Total Cost: $40,999.10 (Buy)
Total Cost: $42,763.70 (Lease)
Don’t Keep the Car
Total Cost: $14924.22 (Buy)
Total Cost: $17780.80 (Lease)
Difference: $2856.60
Buying is the best choice here
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
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
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

Disadvantages: most vehicle leasing programs have a yearly
mileage limit, leased vehicles usually require higher insurance
limits, Lease contracts can be difficult
Resources
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http://www.nada.com/ ( Vehicles pricing, Tip
and advising about lease vs. buy )
www.bmwusa.com ( vehicles about the chosen
car )
http://forums.mwerks.com/zerothread?cmd=pr
int&id=794813 ( formula for lease )
Text Books (Present Worth Analysis)