Posted: 21 May 2010 at 15:05 | IP Logged
|
|
|
I am confused which rate to use.
Becker F5-13 said: The lessee uses the incremental borrowing rate, determined as the lower (lesser) of:
(1) Rate implicit in the lease (if known)
(2) Rate available in the market to the lessee (not prime)
Then the F5-14 example said
Compute the present value of the minimum lease payments, using the lessee’s incremental
borrowing rate, unless:
(1) The lessor's implicit rate is lower, and
(2) The lessee has knowledge of the lower rate.
Then F5-17 example said, 10%, lessor's rate, is used since it iws lower than the lessee's rate and is known.
I am confused. How all these stuff tie to each other?
Is this true?
incremental int rate=lessee's rate
rate implicit in the lease=lessor's rate.
There is
Rate available in the market to the lessee (not prime) also???
|