To Commute or Not Team 3 Members Andy

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To Commute or Not Team 3 Members: Andy Funes Ta-Lun Huang Justin A. Klotz Steven Roos

In this Presentation l l l l Commute or Not? Locations: LA & Palmdale Short & Long term: 5 yrs, 15 yrs, & 30 yrs House, Car, Salary Tax, Interest Rate, Inflation Rate Cash Flow Diagram NPV Sensitivity Analysis

Setting the Stage l l l 30 Years Old Engineer with Experience Married with Children Medium Size Family House: 3+ bedroom Working Location: El Segundo, CA Two Living Locations: l l Palmdale, 5 miles radius of Palmdale Blvd off 14 freeway ramp Los Angles, 15 miles radius of El Segundo Blvd off 405 freeway ramp

Considerations: House l l l l Los Angeles Price: $625, 000 Palmdale Price: $285, 000 Home Interest Rate: 5. 76% Home Appreciation: 7% Down Payment: 20% Appreciation Value Mortgage Payment Property Tax

Considerations: Car l l l l Price & Useful Life: 5 yrs Down Payment: 20% Depreciation / Salvage Mileage: Annual Mileage 3750 vs. 36250 Interest Rate 6. 35% Payment & Maintenance Gas: MPG & Fuel Price

Considerations: Salary l Income / Adjusted Income Tax / Net Income Inflation: 3% MARR: 10% l Use House, Car, and Salary Info. l l Develop NPV

Cash Flow Diagram Example

NPV 5 years 15 years 30 years Los Angeles $370, 683. 31 $670, 667. 22 $797, 738. 40 Palmdale $335, 895. 01 $613, 357. 97 $787, 135. 66

Sensitivity Analysis Example: Appreciation Rate

Sensitivity Analysis Example: Maintenance Cost

The Conclusion l l l LA is the superior choice More expensive on an annual basis Expenses of: l l Living in LA goes to Home Investment Living in Palmdale goes to Transportation Commute becomes more attractive when gas, maintenance are reduced significantly Time Value

Resource & Information l l l Zillow http: //www. zillow. com Kelly Blue Book http: //www. kbb. com Sigalert http: //www. sigalert. com Local Bank Real Estate Agency

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