1. Lease or Buy, Options when Acquiring a Car Group 4 Members: Jason Baughman – Organizer / PowerPoint Juan Sauceda – Lease and Purchase Terms [Ford] Jared Shimizu - Lease and Purchase Terms [BMW] Hung Ton – Worth Analysis

2. Goal Analytically compare the lease and buy options on two types of cars. Analytically compare the lease and buy options on two types of cars. Ford Focus (Low Cost) Ford Focus (Low Cost) Poor resale value Poor resale value BMW (High Cost) BMW (High Cost) High resale value High resale value

3. Analysis Present Worth of each case Present Worth of each case 5 year lease at dealer interest rate 5 year lease at dealer interest rate 5 year purchase at dealer interest rate 5 year purchase at dealer interest rate Vehicle resold to dealer at end of 5 years Vehicle resold to dealer at end of 5 years Four cases total Four cases total Maintenance costs for all cases are equal Maintenance costs for all cases are equal Oil changes Oil changes Basic Maintenance Basic Maintenance No catastrophic failures within 5 year period No catastrophic failures within 5 year period Fuel Costs are Variable between cars Fuel Costs are Variable between cars Manufacturer Ave (H/C) MPG Manufacturer Ave (H/C) MPG 15000 mi/year 15000 mi/year $2.00 /gallon $2.00 /gallon

4. Comparisons Difference in Present Worth [Lease – Buy] for two vehicle classes Difference in Present Worth [Lease – Buy] for two vehicle classes Compares Purchase options for Ford and BMW Individually Compares Purchase options for Ford and BMW Individually Normalized PW [PW / Initial Vehicle Price] Normalized PW [PW / Initial Vehicle Price] Allows the comparison of BMW to Ford Directly Allows the comparison of BMW to Ford Directly Compares the total purchase cost of BMW to Ford Compares the total purchase cost of BMW to Ford

5. Any Questions?