i.) If no, the separate monthly expense is: $ / month j.) If yes, implied monthly expense equivalent to maintenance – cost if equipment was $ / month k.) Gross lease payment, not including separate maintenance (i) $ l.) Less executory (period) costs- Implied maintenance (j) ( ) Other: ( ) m.) Net lease cost (k) (l) $ – n.) Net lease cost over lease term (m) x (a) $ 11. Present Value determination: Use the lesser interest rate of: a) incremental borrowing rate of approximately 6.0% - use Present Value Table provided; or b) the implicit (not expressed directly) rate in the lease of % Present Value Table 10(a) Lease Term Months Present Value Annuity Factor Future of single (PVAF) 6.0% Payment Factor (FVPF) 6.0% 12 11.219 0.943 18 17.173 0.917 24 22.553 0.890 30 27.794 0.895 36 32.871 0.839 42 37.798 0.815 48 42.580 0.792 60 51.725 0.747 72 60.340 0.705 11(a) Present Value of Net Lease Payments Multiply the net lease 10(m) $ – cost 10(m) by the present value annuity factor corresponding with x PVAF $ the lease term 10(a) = 11(a) $ NOTE: If 10(g) is No, skip sections 11(b), 11(c), and 11(d), go to 11(e). 11(b) Present Value of Lease End Price Multiply the purchase 10(f) $ – price at end of the lease 10(f) by the future value of single payment x FVPF $ factor corresponding with the lease term 10(a) = 11(b) $ 11(c) Cost of Equipment during lease Subtract the present value 9(c) $ – of the purchase price at the end of lease 11(b) from the net purchase - 11(b) $ price 9(c) = 11(c) $ 11(a) $
i.) If no, the separate monthly expense is: $ / month j.) If yes, implied monthly expense – equivalent to maintenance cost if equipment was $ / month k.) Gross lease payment, not including separate maintenance (i) $ l.) Less executory (period) costs- Implied maintenance (j) ( ) Other: ( ) m.) Net lease cost (k) – (l) $ n.) Net lease cost over lease term (m) x (a) $ 11. Present Value determination: Use the lesser interest rate of: a) incremental borrowing rate of approximately 6.0% - use Present Value Table provided; or b) the implicit (not expressed directly) rate in the lease of % Present Value Table 10(a) Lease Term Months Present Value Annuity Factor (PVAF) 6.0% Future of single Payment Factor (FVPF) 6.0% 12 11.219 0.943 18 17.173 0.917 24 22.553 0.890 30 27.794 0.895 36 32.871 0.839 42 37.798 0.815 48 42.580 0.792 60 51.725 0.747 72 60.340 0.705 11(a) Present Value of Net Lease Payments – Multiply the net lease cost 10(m) by the present value annuity factor corresponding with the lease term 10(a) 10(m) $ x PVAF $ = 11(a) $ NOTE: If 10(g) is No, skip sections 11(b), 11(c), and 11(d), go to 11(e). 11(b) Present Value of Lease End Price – Multiply the purchase price at end of the lease 10(f) by the future value of single payment factor corresponding with the lease term 10(a) 10(f) $ x FVPF $ = 11(b) $ 11(c) Cost of Equipment during lease – Subtract the present value of the purchase price at the end of lease 11(b) from the net purchase price 9(c) 9(c) $ - 11(b) $ = 11(c) $ 11(a) $
DFS-A1-411ChecklisttoLeaseEquipment-6.13.2017.docx