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Replacing EL Poderoso Case Solution

Solution Id Length Case Author Case Publisher
2059 421 Words (3 Pages) Fredrik Odegaard Ivey Publishing : 909E25
This solution includes: A Word File A Word File and An Excel File An Excel File

The professor owned El Poderoso, a 20 years old Volvo 240, which needed to be replaced immediately as the car had become unsafe with smoke and smell of burnt wiring coming from it every day. After visiting two dealers of Volkswagen and Toyota, the professor and his wife shortlisted two cars that they could buy- Volkswagen Golf City and Toyota Matrix XR. Both car companies offered car financing options at different rates of interest; hence, the professor was faced with a decision of which car to select by valuing both the deals. 

Following questions are answered in this case study solution

  1. Introduction / Problem Identification

  2. Analysis

  3. Conclusion


Case Analysis for Replacing EL Poderoso

2. Analysis

It can be understood from the case that the current budget of the professor for buying the car is equivalent to $20,000. However, both the options selected have a higher price making Professor think how much discount would be needed to be able to cover the car cost. The following table summarizes all the quantitative results:

It can be seen that the higher interest rate for Toyota financing would increase the car cost from Golf by 14% in case of 3 years financing and 18% in case of four years financing, which is quite high from the initial difference of 2% between the prices of both the cars. Hence, based on these statistics, it does not seem feasible to go ahead with buying Toyota, given the budget constraints of the professor.

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