MBF3C FOUNDATIONS FOR COLLEGE MATHEMATICS

Profile Section 4: Owning and Operating a Vehicle

In this section, you will be exploring obtaining and operating a vehicle. This entails insurance,
gasoline, taxes, buying, leasing, financing, and depreciation. There are two ways to approach this
case study:
Option 1: Choose a vehicle that you realistically would want to own in the future that is
reasonably priced
Option 2: Choose a vehicle that you have always dreamed about owning and realize the costs
with owning that vehicle

Part 1: Selecting a Vehicle

In selecting a vehicle to own, you always need keep in mind the type of lifestyle you would want
to live. Would you commute to work? Do you have pets? Do you want children? Do you like to
travel? These are just examples of questions that may influence the type of car you buy.
Choose a current model year vehicle that you would like to own and fill in the following
information:
Make: _________________________________
Model: ________________________________
Options:_______________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

Part 2: Insurance
Use the internet (www.ibc.ca is a great resource) to find the answers to the following questions:
1. What is a deductible?

2. What happens to an insurance premium when a deductible is lowered?

Select an insurance company of your choice. You may wish to speak to your guardians about
whether or not you are already insured with a company for other things or what company they

MBF3C FOUNDATIONS FOR COLLEGE MATHEMATICS

have selected and why. You can google and also find many local insurance brokers. A few
examples of local insurance companies are:
State Farm Insurance
McCam Insurance
PC Insurance
All State Insurance
Insurance Company Chosen: _____________________________________________
Use the insurance company website to answer the questions below. Use the information based on
the vehicle you selected and use your own personal information as much as possible for accurate
information. If you dont feel comfortable sharing this information, try to use alternative
information but make sure it is included in this case study for reference.
Note: If you do not have a license, pretend that you do. You may pick whatever coverage you
like and you are the ONLY driver on the vehicle.
1. What are some of the major factors the insurance company considers when giving an
insurance quote?

2. What was your own quote?

3. Based on the factors considered, describe a scenario of when you might have a very high
insurance quote?

MBF3C FOUNDATIONS FOR COLLEGE MATHEMATICS

Part 3: Gasoline Prices

1. Estimate the price of gas per litre today closest to your current home (rough estimate).

2. What size of tank does the car you have chosen have? (You may have to look it up)

3. How much would it cost to fill this tank, based on todays price?

4. Look up the fuel consumption of your car. It will be given as litres per 100km. There
should be a value for city and highway driving. What are the values?

5. Why might you get better fuel efficiency on the highway?

6. Choose a destination anywhere in Canada or the United States that you have always
wanted to visit. Use www.google.ca/maps or www.mapquest.ca to determine the distance
in km to get there. Include a map picture of your road trip.

7. If the whole way was highway driving, how many litres of gas would you need to get
there?

8. How much would this cost, based on todays price of gas?

MBF3C FOUNDATIONS FOR COLLEGE MATHEMATICS

Part 4: Maintenance Expenses

1. How often is it recommended you get an oil changed in the car youve chosen?

2. Use the internet to look up the price for a based oil change. Be sure to include taxes! You
can choose any place that does them. How much will it cost you?

3. If you drive an average of 25000km per year, how much will you spend on oil changes?

4. a) When do you need to purchase a license plate sticker?

b) How much does it cost?
c) Where can you get it from?

5. a) How often do you have to get a drive clean emissions test?

b) How much does it cost?

MBF3C FOUNDATIONS FOR COLLEGE MATHEMATICS

Part 5: Financing
1. Suppose you have $5000 to use as a down payment on the car you are financing. Subtract
that from the price of your vehicle. This is the amount you will need to finance, what is
the amount?

2. Assume your bank is giving you a rate of 2.3% compounded monthly, and paid over a 5
year term. Use the TVM solver online (http://goo.gl/qHxc1k) to determine what your
monthly payments will be. Remember that your PV is $0 and PMT is the value you are
trying to find. Enter the values you used and found below:

3. At the end of the 5 year term, how much will you have paid in total? (Dont forget to
include the $5000 down payment at the start)

4. How much have you paid in interest?

MBF3C FOUNDATIONS FOR COLLEGE MATHEMATICS

Part 6: Leasing and New versus Used Vehicle

Leasing:
1. Go to www.canadiandriver.com. Find Calculators and follow the steps to calculate how
much a monthly lease would be for the vehicle that youve chosen. Use a 5 year (60
month) term, and a $5000 down payment.
Monthly Lease Payment: ____________________________________________
2. How much have you paid after the 5 years? (Make sure to add the down payment)
Depreciation:
Depreciation is a major disadvantage of buying a new vehicle. A care depreciates in value the
most after its first year. Here is a chart that shows the typical depreciation rates on a vehicle:
Time Depreciation (% of previous years value)
st
1 Year
30%
2nd Year
15%
rd
3 Year
15%
th
4 Year
10%
5th Year
8%
1. Use the chart to figure out how much your vehicle would be worth after each of the first 5
years.

2. Based on what you found in question 1, when is the best time to purchase a use vehicle to
get the best value and why?

3. One of the major disadvantages to buying a used car is that you may not know what you
are getting. If you were to buy a used car, what are at least 5 important questions you
might want to ask the previous owner?

MBF3C FOUNDATIONS FOR COLLEGE MATHEMATICS

Part 7: New versus Used Vehicle

In your virtual situation, explain whether it would be better for you to buy a new or used vehicle.
This question is subject to your own opinion and lifestyle. Explain why you have made this
choice in detail.