Residual Values
Residual Values: Guaranteed and Unguaranteed
- If lessee agrees to make up the difference between the actual market value of the asset and estimated residual value then you have a guaranteed residual value.
- If lessee does not agree to make up any difference the residual value is unguaranteed.
- Rental payments as calculated by the Lessor: (as before)
FMV asset
less PV RV (guaranteed or unguaranteed)
Amount to be recovered (PVMLP)
PVMLP = A(Present Value Interest Factor, annuity)