Team11_Project_part1
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University of Wisconsin, Madison *
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313
Subject
Industrial Engineering
Date
Dec 6, 2023
Type
docx
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3
Uploaded by MagistrateKomodoDragon3072
Industrial and Systems Engineering 313
Engineering Economic Analysis Project
Part 1
"Comparative Analysis of Ownership Methods:
Toyota Corolla 2023 vs. Nissan Leaf S Plus Hatchback
2023"
Team 11:
Andrew Vanderkolk
Atharva Dixit
Hitesh Narra
Tanmay Bhatia
Tejas Tale
Introduction:
The primary goal of this project is to develop proficiency in performing economic analyses
related to buying a car. The project encompasses a thorough comparison of car types, with a
specific focus on electric and gasoline vehicles. Additionally, it includes an evaluation of the
choices between buying and leasing a car, as well as an exploration of the distinctions
between purchasing a car outright with cash or through a loan.
Considerations and assumptions:
Interest rate of 5%.
After considering factors of inflationMARR of 10%
Life of the car: 3 years with a salvage value
Toyata Corolla-
Toyota Corolla
Buying cost
$22,995.00
Salvage
Value
$17,000.00
Year
Annual
maintenance and
Operation
Insurance
1
$1,776.00
$1,680.00
2
$2,052.00
$1,764.00
3
$2,496.00
$1,852.20
Nissan Leaf S Hatchback-
Nissan leaf
Buying cost $28,000.00
Salvage
Value
$19,000.00
Year
Annual
maintenance and
Operation
Insurance
1
$748.00
$1,444.00
2
$785.40
$1,516.20
3
$824.67
$1,592.01
Vehicle selection:
As electric vehicles have lower maintenance and operating costs, owning an electric vehicle
is considered. Two cars were compared, Toyota Corolla 2023 and Nissan Leaf S Plus
Hatchback 2023.
From an economic perspective, owning an electric vehicle, such as the Nissan Leaf S Plus
Hatchback 2023, over a traditional vehicle like the Toyota Corolla 2023, showcases distinct
advantages. These include notably lower operational and maintenance costs due to reduced
reliance on gasoline, potentially resulting in long-term cost savings. The higher energy
efficiency of electric vehicles contributes to reduced fuel expenses, aligning with economic
efficiency principles.
Ownership decision:
When choosing between leasing and buying a car, key factors include preferences for
ownership, budget considerations, and driving habits. Leasing typically offers lower monthly
payments (around $250-$400) but comes with mileage restrictions and no ownership at the
end. Buying involves higher monthly payments (approximately $350-$600+) but provides
ownership and no mileage limits. Consider maintenance costs (averaging $600-$800 annually
post-warranty for owned cars), depreciation (20%-30% in the first year), and long-term
expenses (leasing around $15,000-$25,000 over 5 years versus buying at $20,000-$35,000+).
Other factors like tax deductions and market conditions also influence the decision.
Financing decision:
When comparing the decision to buy a car outright versus taking a loan, several factors
influence the choice, especially when considering the Toyota Corolla 2023 and Nissan Leaf S
Plus Hatchback 2023.
If you have a good credit score and are considering a 60-month loan with interest rates
around 6.44% for the Corolla and 6.29% for the Leaf (which may fluctuate with market
conditions).
Buying a car outright means paying upfront without any extra costs from loan interest, but it
might strain your immediate cash. Taking a loan spreads payments over time, making it easier
initially, but you'll pay more due to added interest. Also, think about how tying up your cash
in a car purchase affects other potential investments. Electric cars might save on running
costs but cost more initially. Your choice depends on your immediate money situation and
long-term plans. Consider how paying upfront compares with the added cost of a loan to
make a smart financial decision
.
Conclusion:
In our upcoming analysis, we aim to compare the Toyota Corolla 2023 and Nissan Leaf S
Plus Hatchback 2023 to evaluate aspects of leasing, buying with a loan, or purchasing
outright. This investigation will explore ownership costs, depreciation, maintenance, and
environmental impact. While the Corolla emphasizes reliability and cost-efficiency, the Leaf
offers eco-friendly benefits and potential long-term savings. Our goal is to provide a
comprehensive assessment, enabling an informed decision tailored to individual preferences
and financial considerations.
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