You are expected to spend a good amount of time researching, analyzing and producing your project report. Your project will be evaluated on the basis of data collection and analysis accuracy (worth 20 pts), thoroughness/detail (20pts), the appropriate use of tools and methods discussed in the course (worth 20 pts), and the quality/clarity of the project report (20 pts). Note: BOTH Project #1 (mutual fund investment scenarios) and THIS project are due on the last day of class.
Your submitted report should follow proper business report writing standards (preferably typed and in PDF format, with electronic supplements such as Excel files also submitted) and include: (a) an Executive Summary that briefly describes your results, methods, and recommendations, on one page, (b) print-outs or an Excel file of collected data listings including Excel-based CFDs, pricing data, purchase data, etc., over the time period studied, (c) print-outs or Excel file containing the analysis performed, and (d) additional written details that describe your assumptions, the steps you performed, the rationale behind your conclusions, and your uncertainties that the report reader should be aware of.
GOALS OF THIS PROJECT:
A. Research your assigned vehicle to estimate or determine all costs associated with owning OR leasing a vehicle, and operating this vehicle for 3 years, based on the assumptions mentioned below.
B. Develop MONTHLY cash flow diagrams and analyze the OWN vs. LEASE options to determine which is the better situation.
ASSUMPTIONS/DETAILS
1) You must assess acquiring the vehicle in one of 2 ways (and will be comparing these options):
a. purchase the vehicle NEW using $3,000 of your own money, and the remainder of the initial cost with a car loan ?from either a local bank or from the dealer, at the bank or dealer's current lending rate, OR
b. lease the NEW vehicle by making the down payment specified by a vehicle dealer, and making payments as ?specified by the lease agreement (seek out lease arrangement details from the manufacturer's or dealer's ?website).
2) You will make loan or lease payments MONTHLY, and the CFD and analysis must be on a monthly basis (36 months).
3) You will drive your selected vehicle a customary amount (similar to your own personal driving pattern) BUT if you do not ?drive much, assume you will drive this vehicle to/from work and/or school AT LEAST 10 miles each way, at least 5 ?days/week, for at least 2 semesters each year.
4) Assume you will use the vehicle for some additional pleasure driving, to places you normally would go each year (for ?example, to Northern Michigan during the summer or to visit relatives in another state), so add on these extra miles of use.
5) Assume the vehicle fuel economy is that promised by the manufacturer (city and highway); estimate your city and highway ?driving percentage so you can develop a composite MPG value for your driving pattern; assume fuel cost is $3.25/gal.
6) Whether leasing or owning, you will insure the vehicle with a reputable insurance company (web-based insurance company ?quote is OK to use as your expense) and you will maintain the vehicle (oil changes, tire rotation, filter replacement, etc.) based on the manufacturer's regular schedule. Regardless of whether you purchase or lease, assume you must pay all insurance and maintenance costs.
7) While owning or leasing, assume you will NOT experience any accidents or damage that would reduce the value of the vehicle beyond normal wear and depletion.
8) (AFTER 3 YEARS = 36 months) If purchased, you will sell the vehicle at a fair price that you estimate based on past data that you collect for similar aged vehicles of this model or brand. If you lease the vehicle, you will be turning in the vehicle (with no salvage) upon making the last lease payment.
9) The document "PILKINGTON CASE STUDY" has been uploaded to Blackboard. YOUR study will be DIFFERENT than the Pilkington Case, but you can use this document for some ideas on what/how to cost and analyze your options.