Contents

About the author Who needs this book? Introduction How to use this book Acknowledgements Conventions 1 Introduction and overview Scope of the book Financial mathematics Simple interest Compound interest Future value Present value Nominal and effective rates Continuous discounting Conversions and comparisons Basic Excel design Basics of design Objectives User interface Key variables and rules Layout Individual modules Menu structure Management reporting Future development Testing and auditing Protection Documentation Peer group comments Example model Summary 2 Leasing structures Definitions Leasing products Finance lease Selection Leasing period Bargain purchase option Automatic transfer of title Present value Accounting and taxation Value added tax and sales tax Fixed term rental Operating lease Lease purchase or hire purchase Contract hire Contract purchase Fleet management Rental and hire Benefits of leasing Lessees reasons for leasing

Spreading the cost Clear source of finance 100% finance Cost relative to other sources of finance Ownership Flexibility Security Further bank credit Convenience Responsibility Balance sheet treatment Lessee disadvantages Lessors reasons for leasing Tax benefits Interest spread Fees Terminal values Vendor leasing Risk analysis High level macro or environmental risk Industry risk Client risks Non-financial risk Future of leasing Summary 3 Financial functions Time value of money Multiple cash flows Internal rate of return NPV and IRR NPV periodic example Modified internal rate of return Amortisation Summary 4 Leasing calculator Excel methodology Functions and methods Worked examples Summary 5 Lease pricing Theory Cost of capital Returns Cash flows Targeting returns Summary 6 Lease accounting Accounting standards SSAP 21 IAS 17 SFAS 13 Future new standards Lessees

Lessors Summary 7 Lessee accounting Finance leases Operating leases New standards Summary 8 Lessor evaluation Financial objectives UK taxation Financial and non-financial reasons Finance leases Amortised interest Net cash invested Sum of digits Operating leases Proposed standards Finance leases Operating leases Sensitivity Summary 9 Lessee evaluation Financial and non-financial reasons Financial objectives Finance leases Discounted cash flows Pre-tax evaluation Discount rate Post-tax evaluation Operating leases Sensitivity Summary 10 Asset management Asset use cycle Value creation Lease termination Lease type Equipment type Maintenance and upgrading Cash flows Evaluation of gains and losses Summary 11 Case study Case study outline Worked case study Lessor evaluation Lessee accounting Lessee evaluation Settlement analysis Summary

12 Appendix Bibliography Function list Excel 2012 files Software specification System requirements Installation Accessing the application files Licence Microsoft Office 2010 (Office 14) Microsoft Office user interface overview Key features The Ribbon Contextual tabs Galleries Live Preview Migration Office menus home Insert Page layout Formulas Data Review View Developer Add-Ins Options General Options Formulas Options Proofing Options Save Options Advanced Options Customisation Options Trust Centre Options Resources Glossary