1. Team #6 Presentation Buy or Lease a Car Joyce Barcimo - Presenter Brian Lombardi - Tech Malika Singh - Organizer

2. Our Situation: Lexus IS 250 –Reliable & safe –High quality –Good gas mileage –Good resale value Buy or Lease

3. Option 1: Buy Base MSRP: $31,425 Finance term: 60 months Very good credit: 8.3% $10,000 down payment Salvage Value: $ 12,885 Monthly payments: $438

4. Option 2: Lease $10,000 down payment Lease term: 60 months Mileage option: 15,000 mi/yr Salvage Value: $0.00 Monthly payment: $236

5. Annual Worth Analysis Buy Cash Flow N = 60 $ 10,000 A = 232 S =$ 0.00 N = 60 $ 10,000 A = 432 S =$ 12,885 Lease Cash Flow

6. Sensitivity Analysis Buying or Leasing Various Down Payment Various APR’s Different Financial Periods

7. Various Down Payments and Years 3 to 5 year range Down payments varied from $0 to $10,000 Buying is better for the long-term (5 years) Leasing is better for the short-term (3 years)

8. Various APR’s and Financial Periods 3 to 5 years Down payment: $10,000 Different APR’s did not affect mo. pmt. very much Buying is better for the long-term (5 years) Leasing is better for the short-term (3 years)

9. Our Decision: MSRP: $31,425 Period: 5 years Buy salvage value: $12,885 Lease salvage value: $0.00 Buy: $5,749.69 (EUAC) Lease: $7,932.92 (EUAC) Difference: $2183.83/yr Buying is a better choice because it has a lower Equivalent Uniform Annual Cost.

10. Advantages and Disadvantages of Leasing Advantages: Allows you to continuously drive new cars, while having a less monthly payment. Also, leasing allows you not to hassle with selling your car. Disadvantages: Leasing vehicles have a yearly mileage limit, higher insurance rates.

11. Advantages and Disadvantages of Buying Advantages: You can sell your car when you want to with no mileage restrictions. Also you can modify the car. Disadvantages: The vehicle may begin to break down, as the warranty will end. The car will begin losing more value in the end.

12. References www.kbb.com (Vehicle salvage value, advice about lease vs. buy)www.kbb.com www.lexus.com (Vehicle car pricing information)www.lexus.com www.autos.msn.com (More advice about lease vs. buy)www.autos.msn.com Text (Annual Worth Analysis)

13. Our Decision: MSRP: $31,425 Period: 5 years Buy salvage value: $12,885 Lease salvage value: $0.00 Buy: $5,749.69 (EUAC) Lease: $7,932.92 (EUAC) Difference: $2183.83/yr Buying is a better choice because it has a lower Equivalent Uniform Annual Cost.