brent groomdavid tran luu tran presentation topics lease vs. buy comparison sensitivity analysis...
TRANSCRIPT
Brent Groom David Tran
Luu Tran
Presentation Topics
Lease vs. Buy Comparison Sensitivity Analysis Decision Resources
Lease vs. Buy Comparison
Basic Assumptions for 5 years:
Buying Leasing
Car (2005)
Camry LE V6
Camry LE V6
Down $5000 $5000
Miles N/A 12,000
Credit 720 720
Leasing vs. Buying
Basic Research Results for the Toyota Camry V6 LE
Price $22,500
Down Payment $4,700
Nominal interest 6.07%
Leasing vs. Buying
Basic Research Results:
Buying Leasing
Monthly $387 $252
Salvage $8,800 0
Leasing vs. Buying
Basic Calculated Results:
Buy Lease
PMT $378 $252
Future Value
$32,815 $25,015
Analysis
Buy Lease
Re-paint Yes No
Payment Higher Lower
Mileage limit No Yes
Salvage value
Get to keep no
Analysis
Toyota Camry LE V6 Cash Flow Diagram
Buying(cal)
n = 60
$ 4,700
A = $378
S = $8,800
Leasing
n = 60
$ 4,700
A = $252
S = $0
Sensitivity Analysis
Variables: - Down Payment
- Leasing term (n)- Mileage
Sensitivity Analysis
Varying Down Payment
Down Payment
Buying PMT
Leasing PMT
0 $470 $344
2500 $421 $295
4700 $378 $252
Sensitivity Analysis
Varying termMonth Buying Leasing
36 $595 $372
48 $459 $297
60 $378 $252
Sensitivity Analysis
Varying the over mileagesMileages over Cost/mile Additional
charge
1000 $0.15 $150
2000 $0.15 $300
3000 $0.15 $450
Decision
Lease or buy, which one is better?- Lease allow lower monthly payment, always under warranty, and drive new car every 2 or 3 years.- Buy allow payment –free for a while, resale the car, and able to upgrade
Secret price quote.Cost of the car that is below the dealer invoice
Decision Monthly cost analysis Using EUAC:
Buying: $334Leasing: $334
• Another way of looking at it:
Buy Lease Difference
Monthly Payment
$378 $252 $126
Salvage $8800 0
In order to make $8800 in 60 months, need interest rate of .005058% or the nominal interest rate of 6.07%, which is the same as buying.
Leasing Formulas Residual = 60% *(MSRP) Net cap cost = Negotiate price - down Depreciation = (Net cap cost –
residual) / n Finance =(Net cap cost + residual) *
money factor PMT = Depreciation + Finance + Tax
ResourcesFor new/used car comparison
http://www.autos.yahoo.comFor information how to lease or buy
http://www.leaseguide.comFor the Secret Price Quote http://www.carpricesecrets.comFor Salvalge value and car price:
http://www.kbb.com//http://www.edmunds.com/http://www.cars.com/go/index.jsp?aff=nationalhttp://www.leasecompare.com/
Car- Lease v.s Buy