Help & Definitions

The date when the periodic rental payments commence.  If the Base Term Start Date occurs after the Funding Date then an interim term will be created and one non-periodic payment will added to the Rent Payment Schedule. To remove an interim payment set the Base Term Start Date equal to the Funding Date. For a monthly payment frequency, the Base Term Start Date cannot occur more than 90 days after the Funding Date. For all other payment frequencies the interim term cannot exceed the number of days in the Payment Frequency.

This field is for informational purposes only and will always be equal to the Lessor Cost of the Asset.  Under certain situations, such as assets that qualify for Investment Tax Credits (ITC), the depreciation basis will be reduced by 50% of the amount of ITC taken. ITC related transactions are currently beyond the scope of this program. It is anticipated that future versions of the program will allow the user to enter the Basis amount directly.

The additional amount of first year depreciation that is available to the owner of depreciable property. Under current law the bonus depreciation for 2024 is 60% and will be reduced by 20% per year thereafter until it is phased out in 2027.

The method used to calculate the number of days between two dates.  The conventional day count method used in the Leasing industry is the 30/360 Day Count method, but the user has 3 additional options.

When creating a new Lease, the user has the option of using the parameters provided by the program or those defined by the user.  However, this toggle button will remain disabled until the parameters of a current Lease have been saved using the option directly below and after submitting the form.  Upon returning to this form, this option will be enabled and the user can elect to use the program's default Lease parameters or those that have been saved by the user.  Subsequently, the user can save a new Lease as the default Lease, but the program's default Lease cannot be changed.

This is the day of the month that the Lessor pays its quarterly or year end taxes. Conventionally, the 15th day of the month is used but the user may input any recurring day of the month.

The rate used to calculate two present value amounts, 1- PV1, which the present value of the Rental payments and 2- PV2, which is the present value of the Rentals payments plus the amount of the Lessee's Residual Guaranty. PV1 and PV2 are shown in the Rentals results screen.

The date when the periodic rental payments commence.  If the Base Term Start Date occurs after the Funding Date then an interim term will be created and one non-periodic payment will added to the Rent Payment Schedule. To remove an interim payment set the Base Term Start Date equal to the Funding Date. For a monthly payment frequency, the Base Term Start Date cannot occur more than 90 days after the Funding Date. For all other payment frequencies the interim term cannot exceed the number of days in the Payment Frequency.

The EBO exercise date must occur on or before one year prior to the Lease maturity date but no earlier than the first anniversary date of the Lease.  An EBO Amount that is less than the par value on the applicable exercise date will result in an EBO yield that is less than the full term after-tax yield and potentially will result in a book loss.

The EBO Amount can not be entered manually, but instead is expressed as a spread in basis points over the full term MISF After-Tax Yield. The basis point slider is accurate to ~ +/- 1 bps.   To adjust the EBO amount move the slider to the appropriate bps spread and then press the calculate button to derive the EBO Amount. It is important to remember than any subsequent change to the Investment parameters will result in the EBO being removed from the Investment.  The EBO can be added back after all changes to the Investment are completed.

An EBO can be added to or removed from the Investment using the Add/Remove EBO buttons below. Note, an EBO will be automatically removed from the Investment when any investment parameter changes

If the Base Term Commencement Date starts on the last day of a month having 30 days and the EOM Rule is on, then the subsequent Rental payment due dates for the months with 31 days will occur on the 31st of the applicable month.  If the EOM Rule is off then payment due dates for the months with 31 days will occur on the 30th. The payment dues date will occur on the last day of February in either case.

The amount paid by the Lessor to the seller in order to purchase the Lease. Alternatively, if the Fee Type is income then the Fee represents the additional amount the seller must pay in order for the Lessor to purchase the Lease.  Do not use this field to input any Fee paid by the Lessee.  For Lessee paid fees enter an advance Rent in the Rent Screen.  Note, that if the Fee Amount is set to 0.00 then the Fee will be removed from the Investment,

This field is for informational purpose only. The date that the Fee is paid will always occur on the Funding Date of the Lease.  In future versions of the program this field may become determined by the user.

A Fee may be added to or removed from the Investment using the Add/Remove Fee buttons below. A Fee can also be added by selecting it as a solveFor option in the economics screen. Setting the Fee Amount to 0.0 will also remove a Fee from the Investment.

The last payment will be added to the first payment and the last payment will be set to 0.00.

The last two payments will be added to the first payment and the last two payments will be set to 0.00..

The date that the asset is funded by the Lessor.  This date can occur on the Base Commencement Date or it can occur at an earlier date

Is the discount rate that equates the present value of the Minimum Lease Payments and the unguaranteed Residual Value to the Lessor's Cost as of the Funding Date. The Implicit Rate is then used to discount the Lessee's Minimum Payment Obligations to determine if the Lease passes or fails the 90% test in connection with the classification of the Lease as either an operating or a finance lease.

From left to right the buttons are Cancel, Copy to Clipboard, Paste from Clipboard, Clear All, and Enter

Is the amount of the Residual Value that is guaranteed by the Lessee.  It is commonly used in TRAC Leases. The amount of the Lessee Guaranty can not exceed the Residual Value of the Asset.

The total number of Base Term Payments for all non-interim Payment Groups must not exceed 180 months when adjusting for the Payment Frequency. For example, if the Payment Frequency is monthly, then the total number of payments must not exceed 180.  If the payment frequency is semiannually, then the total number of Base Term Payments cannot exceed 30.

A valid Payment Amount must be a decimal that is equal to or greater than 0.00 but less than the Lessor's Cost of the Asset. To enter a Payment Amount that is greater than the Lessor’s Cost first go to the Asset form and enter a temporary amount for Lessor’s Cost. The return to the Payment Group details form and enter the desired Payment Amount.  Any decimal amount entered that is less than 1.00 will be interpreted as being a percent of Lessor Cost. For example, if the Lessor Cost of the Asset is 1,000,000.00, then an entry of 0.15 will be converted to an entry of 150,000.00.

This amount is equal to the present value of the Rentals discounted at the Discount Rate as shown in the Economics screen

This amount is equal the sum of (1) and (2), where (1) is the present value of the Rentals and (2) is the present value of the amount of Residual Value that is guaranteed by the Lessee.  Both amounts are discounted at the Discount Rate as shown in the Economics screen.

This amount is equal to the sum of (1) and (2), where (1) is the present value of the Rentals and (2) is the present value of the amount of Residual Value that is guaranteed by the Lessee.  Both amounts are discounted at the Implicit Rate as shown above.

In order to rename a file, the renaming section must be active, the current name of the file must exist in the collection, the new file name must not already exist in the collection, and it must be a valid file name.

Is the amount of the Lessor's Cost that the Lessor expects to realize by sale or release of the Asset at the end of the Base Lease Term.  The Residual Value can not be less than zero or greater than the Lessor’s Cost.

Is used in connection with the straight-line depreciation method. The salvage value is the value of the asset at the end of its useful life. Straight-line depreciation in leasing is often used in depreciating property than does not qualify as MARCS property such as some types of utility assets and foreign use property.

A legal file name must not already exist, must not contain any illegal characters, and must be less than 30 characters in length.

This option allows the user to save the current Lease as the default parameters for a new Lease when the "File/New" option on the File Menu Screen is selected. Note, that the file saving procedure will remove any interim term, any Fee, or any Early Buyout from the saved file. This option will not take effect until the option directly above has been toggled to "Use Saved".

The program allows the user to solve for 1- the Lessor Cost, 2- the unlocked Rentals, 3- the Residual value, 4- the Fee Amount, or 5- any one of 3 yields. Because of rounding constraints, the targeting procedure will only be precise to +/- 1 basis point of the Target Yield

The method that is used to calculate the yield of the Investment.  The two primary methods are 1- the After-Tax Multiple Investment Sinking Fund (MISF-AT) method and 2- the Internal Rate of Return of the Pre-Tax Cashflows (IRR of PTCF) method.  The Sinking Fund Rate used in the MISF method is 0.00%.  The MISF-Before Tax Yield is determined indirectly by dividing the MISF-AT Yield by 1.0 minus the Federal Tax Rate.