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| Author: | Gutman, E. Yagil, J. |
| Title: | A practical derived lease rate algorithm |
| Journal: | Management Science
1993 : DEC, VOL. 39:12, p. 1544-1551 |
| Index terms: | DISCOUNT RATE LEASING MANUFACTURING |
| Language: | eng |
| Abstract: | Underlying the widely used multiple-investment-sinking fund (MISF) method for lease evaluation is the determination of a derived lease rate which is a specific rate that provides the lessor with the required yield on equity. To compute this derived lease rate, trial-and-error techniques are traditionally used. In addition to being based on trial-and-error, the employment of these techniques requires a specification of the precise time structure of the various types of cash flows involved, and this can be somewhat technically cumbersome. To overcome these shortcomings, this study presents a mathematical derivation of a formal expression for the derived lease rate. |
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