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Dear Chris,
I kindly ask to explain why they state in the solved version (page 136) that the net investment is calculated as the PV of the fixed payments in the leases plus any GUARANTEED and unguaranteed residual values? I would not expected to have the “guaranteed” there.
Secondly how did they select the value of 3.696 for DF? I would use 3.791.
Thanks a lot for your time.
All the best.Hi,
I’ve not got the question to hand currently but am not too sure why they’ve included the guaranteed amount too as the net investment should only include the guaranteed residual value.
Why would you use 3.791 ad not 3.696? Are yo using the correct rate/number of years? Have you checked if the payments are in advance as opposed to being in arrears?
When I get the chance to look at the question I’ll try and get back to you again.
Thanks
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