Economic Comparison:
Honda Accord vs. Toyota Prius
Team 3
Richard Do
Peter Jo
Lester Oestreich
Carlos Ruiz
Jane Veerachanavirut
Objective
What car is a better deal in a 5-year period?
Honda Accord 2003
Toyota Prius 2003
Analysis Parameters
Gender:
Male
Finance/Lease Term:
4 Years
Age:
25
APR
8.90%
Residence:
Pomona, CA
Warranty
3 Years
Education:
BS Engineering
Analysis Term
5 Years
Credit Score:
Good
Insurance Coverage
100,000/300,000
Salvage Condition
Good
Insurance Term
1 year
Down Payment:
10.00%
Miles Driven per year
15000.000
Economic Analysis Parameters







Financing
Major Maintenance
Insurance
Salvage Value
Gas Costs
Scheduled/Minor Maintenance
License and Registration Fee
Cash Flow Diagram for Toyota Prius
$4,000.00
$3,000.00
$2,000.00
$1,000.00
$0.00
1
3
5
7
9
11
13
15
17
19
21
23
25
27
29
31
33
35
-$1,000.00
-$2,000.00
-$3,000.00
License & Registration
-$4,000.00
Gas Cost
-$5,000.00
Salvage
-$6,000.00
Insurance
-$7,000.00
-$8,000.00
-$9,000.00
Minor Maintenance
Major Maintenance
-$10,000.00
Downpayment
-$11,000.00
Financing
-$12,000.00
-$13,000.00
Months
37
39
41
43
45
47
49
51
53
55
57
59
61
Cash Flow Diagram for Honda Accord
$4,000.00
$3,000.00
$2,000.00
$1,000.00
$0.00
1
3
5
7
9
11
13
15
17
19
21
23
25
27
29
31
33
35
-$1,000.00
-$2,000.00
-$3,000.00
License & Registration
-$4,000.00
Gas Cost
-$5,000.00
Salvage
-$6,000.00
Insurance
-$7,000.00
Minor Maintenance
-$8,000.00
Major Maintenance
-$9,000.00
-$10,000.00
-$11,000.00
Downpayment
Financing
-$12,000.00
-$13,000.00
Months
37
39
41
43
45
47
49
51
53
55
57
59
61
Economic Analysis Method

Net Present Worth and Equivalent Uniform Cost





NPW=PW of cost – PW of benefits
EUC = P(A/P, i, n) - S(A/F, i, n)
5-year Analysis Term
Minimum Attractive Rate of Return 10%
Sensitivity Analysis
Initial Analysis Results

Toyota
 NPW $48,305.09
 EUC $1,026.34

Honda
 NPW $43,208.82
 EUC $918.06
Sensitivity Analysis

Factors affecting NPW
APR
 Insurance
 Gas Inflation
 Downpayment
 Analysis Term

Prius NPW
Sensitiviy of APR on NPW
Accord NPW
$60,000.00
$60,000.00
$50,000.00
$50,000.00
$40,000.00
Sensitivity of Insurance on NPW
$40,000.00
$30,000.00
NPW
NPW
Prius NPW
Accord NPW
$20,000.00
$30,000.00
$20,000.00
$0.00
$10,000.00
3.
00
%
4.
00
%
5.
00
%
6.
00
%
7.
00
%
8.
00
%
8.
90
%
10
.0
0%
11
.0
0%
12
.0
0%
13
.0
0%
$10,000.00
$0.00
Good Standing
Accident
APR
Prius NPW
Accord NPW
Ticket
Woman
Condition
Prius NPW
Sensitivity of Gas Inflation on NPW
Accord NPW
$70,000.00
Sensitivity of Analysis Term on NPW
$100,000.00
$60,000.00
$80,000.00
$40,000.00
NPW
NPW
$50,000.00
$30,000.00
$60,000.00
$40,000.00
$20,000.00
$20,000.00
$10,000.00
$0.00
$0.00
1
1.01
1.02
1.03
Gas Inflation Rate
1.04
1.05
5
6
7
8
Years
9
10
Conclusion

Honda Accord is the better buy based on:



Initial economical analysis.
Sensitivity analysis.
High maintenance cost of Toyota Prius
offsets the savings of its fuel consumption.
References:
•Toyota.com
•Honda.com
•KBB.com
•Consumerreports.com
•Eia.doe.gov
Useful Resources
Bankrate.com – www.bankrate.com
 Offers current information on the best APR for each loan term new and
used
 Information on auto loans in general, credit score, buying
 Car Buying Guides
 Offers a variety of calculators on



How much you can afford?
New or Used?
Buy or Lease?
Car Buying Tips - http://www.carbuyingtips.com/
 Car Buying Guides
 Credit Reports, Car Loans, Quotes, and Warranty Information
 Information on Financing, Lease, New, Used
 Information on how to avoid fraud and current scams
 Information on car insurance