Asset finance / Leasing
See also:
- Finance – Banking, Lending, Leasing
- Accounting
- Loans
- Mortgages
The dollar ($) has been used in these examples, but any other currency (€, £, F, ¥, R, DA, Rs… etc.) may be used.
Most of the calculations below may use Fixed (unique interest rates) or Variable rates.
Real-life examples:
Real-estate (land) purchase decision
Asset finance / Leasing
A car is leased for $25 000. The residual value after 4 years is $10 000. What should be the minimum monthly lease amount if the cost of capital is 10%
Partial results screen:
The minimum monthly payment should be $458.53.
What would be the payment if an up front payment of $3000 is made? Margill can easily recalculate each of the other payments upon changing the first payment to $3000. Select the lines for which the payment must be recalculated and right click with the mouse (see screen shot below)
The new minimum payment would be $392.96.
The table can be completely edited to include any extra payment, a new payment, lump sums, changes in interest rates, etc.
You can also include Interest only payments for a certain time or a Fixed principal amount.
Equipment purchase decision
A new type of machinery is available on the market which costs $500 000. This machine will save the company 6000$ per month in labor costs for the next 20 years (maintenance and depreciation costs are included in the savings).
Should my company purchase this machine given my cost of capital of 7%?
The answer is most probably yes since $500 000 would ordinarily generate only $3876 per month.
The maximum value of the machine should be $773,895 to the company.
The future payments could also easily be indexed according to future projected increases in cash flows. Simply check “Installment Indexation” and choose an indexation table that you can create in a snap.
Real-estate (land) purchase decision
The same principle as above (for equipment purchase decision) should be applied to land purchase decisions. Margill can easily help out with these decisions based on the cost of the real estate and the long term revenues generated.