Process

1. In pairs, you will play the role of a car buyer. Study five manufacturer websites, and analyze the selling prices for the selected models of vehicle. Your decision should depend only on price, not on how much you like the brand. However, you should prepare a realistic analysis of what model of vehicle is appropriate for our situation. Should you consider a “small/compact car”, a “mid-size sedan” , a “minivan”, or a “small SUV”.

(e.g. Ford Company: Ford Focus - “small/compact car”, Ford Fusion - “mid-size sedan”, Ford Escape- “small SUV”)?

Here are some websites…

Ford http://www.ford.ca/app/fo/index.do
Toyota http://www.toyota.ca/
General Motors http://www.gm.ca
Volkswagen http://www.vw.ca/vwca/index/splash
Honda http://honda.ca/default

Visit these websites and look for the prices for each of the four models of vehicle.  Learn the prices for each car. Create a spreadsheet with these prices. Analyzing the spreadsheet, discuss with your partner what model of vehicle you should choose to buy. Discuss your pros and cons and select one type. Write down those pros and cons.

2. At this moment you have selected your model of vehicle (e.g. let's say that it is a small SUV). Now consult the websites again, go to “Build & Price” button and find out how much you will pay during 4 years for each car of this model of vehicle. The total amount will be MonthlyPayment * NumberOfMonths.

Write down how much it will cost you to lease and to finance the car. Analyze which one is the best option.

3. On average, a motorist drives about 24,000 km each year. Add the cost of gas to the total price and see if this changes your decision. For the purpose of this problem think at CAD 1.5 /litre. Check the average fuel cost from one of the following websites:

http://www.oee.nrcan.gc.ca/transportation/tools/fuel-consumption-guide/fuel-consumption-guide.cfm or

http://www.fueleconoyour.gov/feg/findacar.htm.

If the average fuel cost is in mpg (miles per gallon), use this formula to convert from mpg to l/100km (litre per 100 km) l/100km=235.214584/mpg

How much will you spend over 4 years? Is the cost of gas changing your decision?

4. Another option is to buy a second hand car at 70% percent of the market price. For this option you need to borrow money from a bank.

How much will you pay for your type of car if you are buying a second hand car, at the 70% of the price of the new car, and you borrow the money from your bank? (Calculate with a yearly interest of 10% over 4 years).

5. Finally, clean up your calculations and organize them in a PowerPoint presentation.  Be prepared to explain why you chose that type of car. You should also explain which car (e.g. Ford Fusion) would be best after a full explanation of the cost analysis .