Quantitative Financial Analysis of Equipment Rent of Enterprises of Urban Construction and Economy

Abstract

The special case of industrial investment which is the equipment rent by the enterprises of city building and economy is investigated. The necessity in the quantitative financial analysis of the equipment lease arises both for the owner of the equipment and for the lessee. For the owner it is important to correctly determine the amount of rent and financial efficiency of leasing the equipment. The lessee, if there is an alternative, must decide whether to lease the equipment or buy it. These problems can be solved on the basis of purely financial principles, and any method of their solution is based on the concept of the present value of financial flows.
 There are ratios, which allow you to determine the size of payments for the lease of equipment, the effectiveness of leasing equipment for the owner. The problem (to rent or buy equipment?), which is a special case of the problem of measuring efficiency, is solved. Numerical examples of solving the above problems are also given. Particular attention is paid to the analysis of the effect of risk and inflation on the rate of interest on which the discounting of cash flows, rent payments are made. The estimation of the market value of urban construction and economy enterprises with different types of risks taken into account has been carried out. The modification of I. Fisher's formula which allows, in conditions of uncertainty, using appropriate methods to predict the real rate of inflation (as well as using the model of capital market equilibrium - in particular beta coefficient) to determine the expected value of inflation rates, inflation risk premium has been substantiated.