Calculation Functions

AFQS has the following main calculation functions:

1. Quote on Rate Excluding Fees  (Customer Rate)
   
   The variable rentals/instalments are scaled up or down to attain the required implicit interest rate based on the equipment cost only.
    
2. Quote on Rate Including Fees  (Lessor Rate)
   
   The variable rentals/instalments are scaled up or down to attain the required implicit interest rate based on the total amount financed, i.e. the sum of the initial fee and the equipment cost.
    
3. Quote on Yield
   
   The variable rentals/instalments are scaled up or down so that the lessor's pre-tax yield/rate or after-tax margin is maintained.
    
4. Calculate Yield
   
   For a given set of rentals/instalments, the lessor's yield/rate or margin is calculated.
    
5. Recommended Yield
   
   The variable rentals/instalments are scaled up or down to attain the yield based on the pricing parameters. The rate determined as COF + Margin is automatically used with one of the (1) – (3) functions depending on the Quote Method parameter set up through Configuration → Lessor Parameters.
    
6. Solve Functions
    
   • Solve for Equipment Cost
     
     The equipment cost is varied to maintain the entered lessor interest rate. The user must enter the equipment description and the repayments. If there are multiple drawdowns, then the user can solve for a particular drawdown or apportion the solution over all drawdowns in the ratio in which they have been entered.
      
   • Solve for Residual/Balloon
     
     The residual/balloon is varied to maintain the entered lessor interest rate. The user must enter the equipment cost and description and also the repayments. If there are multiple depreciable items, then the user can solve for a particular residual/balloon or apportion the solution over all residuals/balloons in the ratio in which they have been entered.
      
   • Solve for Fee with Drawdown (Brokerage)
     
     The fee with drawdown is varied to maintain the entered lessor interest rate. The user must enter the equipment cost and description and also the repayments. If there are multiple drawdowns, then the user can solve for a particular drawdown fee or apportion the solution over all drawdown fees in the ratio in which they have been entered.
      
7. Finance Comparison
   
   The variations of a quote (usually representing different finance methods, e.g. lease and hire purchase) are compared based on their NPV at a given customer pre-tax discount rate, taking into account various customer specific parameters such as balance month, analysis method, GST lag, income tax lags, etc.
    
8. Payout Calculation
   
   AFQS has four alternative methods to calculate termination amounts. They are:
    
   • Maintain the pre-tax yield or margin.
      
   • Discount the future repayments and residual at a margin below the lessee rate.
      
   • Add damages calculated as a number of repayments to the Actuarial balance.
      
   • Discount the future repayments and residual at an interest rate input by user.

See also:

• Rate Premium
• Vendor Subsidy