Does the asset life and the leaseback have to be same? If the asset life is 40 years as per the example in the lecture and the leaseback is 35 or upwards, would that also be considered as a secured loan since we are leasing it back for the majority of the asset life?
Example 7 says that the lease payments are due at the end of the lease period, would that not mean all 10m falls due in 10 years to the PV should be £6,139,132?
Lease term is 10 years. at the end of each year 1m is paid. This is an annuity payment so you use the annuity pv formula. ?1m * (1 – ((1+r) power of -n)/ r) or just search annuity present value formula.
roberts says
Does the asset life and the leaseback have to be same? If the asset life is 40 years as per the example in the lecture and the leaseback is 35 or upwards, would that also be considered as a secured loan since we are leasing it back for the majority of the asset life?
wgk says
The lease payments are made at the end of each year and the $7.72 is correct.
1 1 0.95
2 1 0.91
3 1 0.86
4 1 0.82
5 1 0.78
6 1 0.75
7 1 0.71
8 1 0.68
9 1 0.64
10 1 0.61
7.72
dazzah666 says
Example 7 says that the lease payments are due at the end of the lease period, would that not mean all 10m falls due in 10 years to the PV should be £6,139,132?
tumbahangphe@hotmail.com says
Lease term is 10 years.
at the end of each year 1m is paid.
This is an annuity payment so you use the annuity pv formula. ?1m * (1 – ((1+r) power of -n)/ r) or just search annuity present value formula.
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