Spreadsheet Models for Managers

Session 9

Capital Leases I
Summary of Pages

o model capital leases, we must understand the interplay between the lease term, the interest rate, and the number and frequency of payments. Excel offers several worksheet functions that implement the underlying formulas that express these connections.

The worksheet functions we'll explore relate to computing present and future value, and payments for a loan based on constant payments and interest. These constancy conditions are troublesome in real life, because interest rates and payments do vary in many loan structures.

In this session, we'll thoroughly explore the use of these facilities, not only in the straightforward situations that one usually encounters, but also in the more complex arrangements that arise when payments or interest rates are non-uniform. Sadly, these situations are more common than we often suppose, so it pays to know how to handle them.

Below is a summary of pages for Session 9.

1. Review of Last Time
2. Capital Leases
3. Present and Future Value
4. Future Value
5. Future Value in Excel
6. Future Value in Excel (continued)
7. Future Value Examples
8. Non-Uniform Future Value
9. Present Value
10. Present Value in Excel
11. Present Value Examples
12. Non-Uniform Present Value
13. Calculating Payments
14. Payment Calculation Examples
15. Reference Readings
16. Preview of Next Time

Links to other materials for Session 9.