let's do leases, now!

CFA Level I
#1

WHAT IS THE 4 STEP CAPITAL LEASE TEST? 15 SECONDS

#2

purchase option at the end of a lease 75% of assets economic life 95% of the discount cash flows asset transfer at end of lease

#3

bargain purchase 75% of economic life of the asset present value of minimum lease payments is 90% of the price lessee gets to keep asset at maturity

#4

Getterdone is wrong with 95%…supersharpshooter right with 90%

#5

boom and boom

#6

damn! stupid 500 basis points!

#7

getterdone Wrote: ------------------------------------------------------- > purchase option at the end of a lease > > 75% of assets economic life > > 95% of the discount cash flows > > asset transfer at end of lease yes, 95% should be 90% – don’t get confused with a significance level of 5% (quant questions come tomorrow)

#8

the other day i was doing a schweserpro problem about leases the present value of MLP’S turned out to be ~89.5% of the fair market value it turns out i had to switch my BA-II from “end” to “beginning” mode, and it was actually 90% do i always have to do this when calculating PV of MLP’s?

#9

supersharpshooter Wrote: ------------------------------------------------------- > the other day i was doing a schweserpro problem > about leases > > the present value of MLP’S turned out to be ~89.5% > of the fair market value companies manage earnings like this, they avoid the capital lease test by hiring a good CFO. EPS goes up.