Method of determining parameters of long-term Lease

Abstract

There is disclosed a technique for determining parameters of a long-term lease of an asset. The method involves determining a set of payments defining an amortisation path from an initial value (A) to a final residual value (M) of said asset over a long-term lease period, and determining a plurality of sets of short-term lease payments such that the plurality of sets of short-term lease paths define respectively one or more interim short-term lease paths (ADF, DGI, GJL) and a final short-term lease path (JM), each interim short-term lease path (ADF, DGI, GJL) consisting of an amortisation portion that corresponds to said amortisation path (AD, DG, GJ) for a respective short-term lease period and a termination amortisation portion (DF, GI, JL) that links the amortisation portion to a short-term termination value falling on a residual value path to said final residual value at a position such that the short-term lease corresponding to the short-term lease path satisfies a predetermined value condition, and the final short-term lease path (JM) consisting of an amortisation portion, whereby the plurality of amortisation portions of the interim and final short-term lease paths correspond collectively to said amortisation path.

1 . A method of determining parameters of a long-term lease of an asset comprising: 
 determining a set of payments defining an amortisation path from an initial value to a final residual value of said asset over a long-term lease period; and    determining a plurality of sets of short-term lease payments such that the plurality of sets of short-term lease paths define respectively one or more interim short-term lease paths and a final short-term lease path,    each interim short-term lease path consisting of an amortisation portion that corresponds to said amortisation path for a respective short-term lease period and a termination amortisation portion that links the amortisation portion to a short-term termination value falling on a residual value path to said final residual value at a position such that the short-term lease corresponding to the short-term lease path satisfies a predetermined value condition, and    the final short-term lease path consisting of an amortisation portion, whereby the plurality of amortisation portions of the interim and final short-term lease paths correspond collectively to said amortisation path.    
     
     
         2 . A method as claimed in  claim 1 , further comprising determining a residual value path from an initial residual value to said final residual value.  
     
     
         3 . A method as claimed in  claim 2 , wherein determining the residual value path involves determining initial residual value, the one or more short-term termination values and the final residual value.  
     
     
         4 . A method as claimed in  claim 1 , wherein the method comprises determining said final residual value by at least determining a minimum viable final residual value of said long-term lease.  
     
     
         5 . A method as claimed in  claim 4 , wherein determining said final residual value comprises selecting the higher value of said minimum residual value and the lessor's desired final residual value.  
     
     
         6 . A method as claimed in  claim 1 , wherein determining each short-term termination value is performed at least in part by determining a minimum viable termination value.  
     
     
         7 . A method as claimed in  claim 1 , comprising determining the period of each short-term lease.  
     
     
         8 . A method as claimed in  claim 7 , wherein determining the period of each short-term lease comprises determining the maximum short-term lease term that satisfies said predetermined value condition.  
     
     
         9 . A method as claimed in  claim 1 , wherein the predetermined value condition is that the lease satisfies a present value test.  
     
     
         10 . A method of providing a long-term lease comprising dividing the long-term lease into a plurality of short-term leases comprising: 
 a final short-term lease; and    one or more interim short-term leases each of which may be terminated by a termination payment such that each short term lease satisfies a predetermined value condition and completion of the long-term lease is optional.    
     
     
         11 . A method as claimed in  claim 10 , comprising determining a final residual value of said long-term lease by selecting the higher value of a minimum residual value and a lessor's desired final residual value.  
     
     
         12 . A method as claimed in  claim 10 , comprising determining a short-term termination values at least in part by determining a minimum viable termination value.  
     
     
         13 . A method as claimed in  claim 10 , comprising determining the period of each short-term lease.  
     
     
         14 . A method as claimed in  claim 14 , wherein determining the period of each short-term lease comprises determining the maximum short-term lease term that satisfies said predetermined value condition.  
     
     
         15 . A method as claimed in  claim 10 , wherein the predetermined value condition is that the lease satisfies a present value test.