Asa wisconsin chapter april 2015 meeting presentation: residual values for machinery and equipment
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Transcript of Asa wisconsin chapter april 2015 meeting presentation: residual values for machinery and equipment
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ASA Wisconsin Chapter
Meeting
Friday, April 24, 2015
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Residual Values for
Machinery and Equipment
ASA presents:
Presenter:
Sharon Desfor, ASA
Upon webinar completion, the participant will be better able to:
Define a residual value and assess when, why, and how is it used
Recognize common errors in residual values (how NOT to calculate
them)
Calculate equipment residual values
Determine other considerations (different depreciation rates, lease
return provisions, and using your own judgment)
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Why Should You Perform
Residual Value Projections?
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(Source: U.S. Equipment Finance Market Study 2012-2013 from the Equipment Leasing & Foundation)
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Comments on methodology
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The majority of banks do not account for any
further inflation in their calculations. This
conservatism can be used to mitigate their risk
factor. Some will then calculate their own present
values at various inflation rates just to see what
kind of margins they might enjoy at lease
termination, but then book the residual at the
uninflated number.
Comments on methodology
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Sharon’s very opinionated opinion
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What does “residual” mean?
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What is a Residual Value?
“Essentially, the term residual value
means the value remaining after some
of the asset’s normal useful life has
been consumed. It can also refer to the
value of the asset at a defined future
point in time. Though the future value is
often defined as the future fair market
value, that’s not always the case.
Again, it is important that the pertinent
sections of the lease document be
reviewed prior to performing any
valuation in connection with a lease.”
(Valuing Machinery and Equipment: The Fundamentals
of Appraising Machinery and Technical Assets, Third
Edition, American Society of Appraisers)10
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Is it even valid to give a future FMV?
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Who Uses Them?
Owners of an asset,
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Who Uses Them?
Operators of those assets,
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Who Uses Them?
Lenders to those owners,
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Who Uses Them?
Taxing authorities (IRS, Inland Revenue)
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Who Uses Them?
Lessees of the assets,
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Who Uses Them?
but mostly Lessors of assets.
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When are they used?
Lease inception
Annual FASB compliance
audit
Asset substitution in a
lease
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Question
How often are you asked to perform a residual
value projection?
A. At least weekly
B. Every month or two
C.2 or 3 times a year
D.Once a year or less
E. I’ve never been asked for a residual value
projection before
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What are Residual Value
Projections Used For,
Anyway?
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Why & How Are They Used?
What are residual value projections used for,
anyway?
• Determining an assets’ end-of-lease value
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Why & How Are They Used?
What are residual value projections used for,
anyway?
• Determining an assets’ end-of-lease value
• The ultimate purpose is developing the lease rate
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Why & How Are They Used?
What are residual value projections used for,
anyway?
• Determining an assets’ end-of-lease value
• The ultimate purpose is developing the lease rate
• Fair rental calculations (remember ME204?)
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Why & How Are They Used?
What are residual value projections used for,
anyway?
• Determining an assets’ end-of-lease value
• The ultimate purpose is developing the lease rate
• Fair rental (remember ME204?)
• Lease rate buildup
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CONTROLLABLE NON-CONTROLLABLE
Lease Rate Buildup – An Oversimplification
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Lease Rate Buildup An Over-Simplification
First - A Loan Example @ 7 year Fixed Rate
2.50%
0.75%
1.50%
1.50%
-.25%6.00%
COST OF
FUNDS
RISK [LOSS
PROVISION]OPERATING
EXPENSESPROFIT LESS: FEES
CLIENT
RATE
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Lease Rate Buildup An Over-Simplification
Now – Price A Lease for 7 years
CLIENT
LOAN
RATE
LESS:
RESIDUAL
UPSIDE
BENEFITS
LESS:
PARTIAL
TAX
BENEFITS
LESS: LIKE KIND
EXCHANGE
BENEFITS
LOWER
LEASE
RATE
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Question
Have you ever been asked to participate or
consult in lease rate negotiations?
A. Yes
B. No
C. It’s been so long I’m a virgin again.
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How NOT to Calculate
Residual Values
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This is a blue book excerpt for the subject asset
2003 average Mid Time value is $1.52MM
2003 Factory List Price is $1.375MM
$1.52MM divided by $1.375MM is 110.5%
Therefore, in ten years the subject asset will be worth
110.5% of its new acquisition price
What is the error?
Common Errors (How NOT to calculate)
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The example uses only current market data
Common Errors (How NOT to calculate)
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The example uses only current market data
• There is no way of establishing from the given data
whether the current value of the asset is historically
relevant
Common Errors (How NOT to calculate)
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The example uses only current market data
• There is no way of establishing from the given data
whether the current value of the asset is historically
relevant
The example uses an old historical price
Common Errors (How NOT to calculate)
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The example uses only current market data
• There is no way of establishing from the given data
whether the current value of the asset is historically
relevant
The example uses an old historical price
• The correct price to use is the Replacement Cost New
Common Errors (How NOT to calculate)
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• This is a compilation of past blue book data for the
subject asset
• What is the most common thing the asset manager
or appraiser will forget to do?
Common Errors (How NOT to calculate)
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The inexperienced appraiser or the asset
manager often forgets to adjust the data for
inflation
Common Errors (How NOT to calculate)
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Initial value at lease initiation
x
Does this look right? =
Common Errors (How NOT to calculate)
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Failing to engage your brain to pick out
unrealistic projections
Common Errors (How NOT to calculate)
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This particular asset ceased production in 1992
Once the resale values are adjusted for inflation, what
else needs adjustment?
Common Errors (How NOT to calculate)
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Failure to adjust historical cost to a current
RCN is an incredibly common error for out-
of-production assets
Common Errors (How NOT to calculate)
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We’re moving on next to calculating the
depreciation rate, or decline rate.
Any questions?
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Calculating Residual Values
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First Line Of Calculations
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First line of calculations
• How to calculate the current value as a % of RCN
Year of Mfr CPI Trend Factor Historic Cost
Trended
Historic Current Value % of RCN
2013 230.28 100.00% 2,350,000 2,350,000 2,350,000 100.00%
2012 226.4 101.71% 2,280,000 2,319,074 2,234,000 95.06%
2011 219.1 105.10% 2,202,000 2,314,361 2,118,000 90.13%
2010 216.6 106.32% 2,125,000 2,259,211 2,002,000 85.19%
2009 215.3 106.96% 1,965,000 2,101,719 1,886,000 80.26%
2008 211.1 109.09% 1,855,000 2,023,541 1,770,000 75.32%
2007 202.4 113.77% 1,750,000 1,991,057 1,720,000 73.19%
2006 198.3 116.13% 1,390,000 1,614,166 1,670,000 71.06%
2005 190.7 120.76% 1,325,000 1,600,005 1,620,000 68.94%
2004 185.2 124.34% 1,300,000 1,616,436 1,570,000 66.81%
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First line of calculations
• Normalize known current sales to standard
Year of Mfr CPI Trend Factor Historic Cost
Trended
Historic Current Value % of RCN
2013 230.28 100.00% 2,350,000 2,350,000 2,350,000 100.00%
2012 226.4 101.71% 2,280,000 2,319,074 2,234,000 95.06%
2011 219.1 105.10% 2,202,000 2,314,361 2,118,000 90.13%
2010 216.6 106.32% 2,125,000 2,259,211 2,002,000 85.19%
2009 215.3 106.96% 1,965,000 2,101,719 1,886,000 80.26%
2008 211.1 109.09% 1,855,000 2,023,541 1,770,000 75.32%
2007 202.4 113.77% 1,750,000 1,991,057 1,720,000 73.19%
2006 198.3 116.13% 1,390,000 1,614,166 1,670,000 71.06%
2005 190.7 120.76% 1,325,000 1,600,005 1,620,000 68.94%
2004 185.2 124.34% 1,300,000 1,616,436 1,570,000 66.81%
•The circled current values
are known, as is the RCN.
•The highlighted values may
be calculated by straight-line
depreciation or other means.
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First line of calculations
• Trend historical cost to RCN as needed
Year of Mfr CPI
Trend
Factor x Historic Cost
Trended
Historic Current Value % of RCN
2013 230.28 100.00% * 2,350,000 2,350,000 2,350,000 100.00%
2012 226.4 101.71% * 2,280,000 2,319,074 2,234,000 95.06%
2011 219.1 105.10% * 2,202,000 2,314,361 2,118,000 90.13%
2010 216.6 106.32% * 2,125,000 2,259,211 2,002,000 85.19%
2009 215.3 106.96% * 1,965,000 2,101,719 1,886,000 80.26%
2008 211.1 109.09% * 1,855,000 2,023,541 1,770,000 75.32%
2007 202.4 113.77% * 1,750,000 1,991,057 1,720,000 73.19%
2006 198.3 116.13% * 1,390,000 1,614,166 1,670,000 71.06%
2005 190.7 120.76% * 1,325,000 1,600,005 1,620,000 68.94%
2004 185.2 124.34% * 1,300,000 1,616,436 1,570,000 66.81%
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First line of calculations
• Simple division
Year of Mfr CPI Trend Factor Historic Cost
Trended
Historic Current Value % of RCN
2013 230.28 100.00% 2,350,000 2,350,000 2,350,000 100.00%
2012 226.4 101.71% 2,280,000 2,319,074 2,234,000 95.06%
2011 219.1 105.10% 2,202,000 2,314,361 2,118,000 90.13%
2010 216.6 106.32% 2,125,000 2,259,211 2,002,000 85.19%
2009 215.3 106.96% 1,965,000 2,101,719 1,886,000 80.26%
2008 211.1 109.09% 1,855,000 2,023,541 1,770,000 75.32%
2007 202.4 113.77% 1,750,000 1,991,057 1,720,000 73.19%
2006 198.3 116.13% 1,390,000 1,614,166 1,670,000 71.06%
2005 190.7 120.76% 1,325,000 1,600,005 1,620,000 68.94%
2004 185.2 124.34% 1,300,000 1,616,436 1,570,000 66.81%
Divide Current Value by
Trended Historic Cost.
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First line of calculations
• These percentages are your first line of calculations
Year of Mfr CPI Trend Factor Historic Cost
Trended
Historic Current Value % of RCN
2013 230.28 100.00% 2,350,000 2,350,000 2,350,000 100.00%
2012 226.4 101.71% 2,280,000 2,319,074 2,234,000 95.06%
2011 219.1 105.10% 2,202,000 2,314,361 2,118,000 90.13%
2010 216.6 106.32% 2,125,000 2,259,211 2,002,000 85.19%
2009 215.3 106.96% 1,965,000 2,101,719 1,886,000 80.26%
2008 211.1 109.09% 1,855,000 2,023,541 1,770,000 75.32%
2007 202.4 113.77% 1,750,000 1,991,057 1,720,000 73.19%
2006 198.3 116.13% 1,390,000 1,614,166 1,670,000 71.06%
2005 190.7 120.76% 1,325,000 1,600,005 1,620,000 68.94%
2004 185.2 124.34% 1,300,000 1,616,436 1,570,000 66.81%
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Second Line Of Calculations
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Second line of calculations
• How to calculate the past value as a % of RCN
Year of Mfr CPI
Trend
Factor
Historic
Cost
Trended
HistoricPast Values
Trended
Past % of RCN
2013 230.28 100.00% 2,350,000 2,350,000 1,370,000 1,370,000 58.30%
2012 226.4 101.71% 2,280,000 2,319,074 1,375,000 1,398,564 59.51%
2011 219.1 105.10% 2,202,000 2,314,361 1,455,000 1,529,244 65.07%
2010 216.6 106.32% 2,125,000 2,259,211 1,455,000 1,546,895 65.83%
2009 215.3 106.96% 1,965,000 2,101,719 1,685,000 1,802,238 76.69%
2008 211.1 109.09% 1,855,000 2,023,541 1,237,500 1,349,936 57.44%
2007 202.4 113.77% 1,750,000 1,991,057 987,500 1,123,525 47.81%
2006 198.3 116.13% 1,390,000 1,614,166 987,500 1,146,755 48.80%
2005 190.7 120.76% 1,325,000 1,600,005 987500 1,192,457 50.74%
2004 185.2 124.34% 1,300,000 1,616,436 912500 1,134,614 48.28%
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Normalize past sales to standard
Year of Mfr CPI
Trend
Factor
Historic
Cost
Trended
HistoricPast Values
Trended
Past % of RCN
2013 230.28 100.00% 2,350,000 2,350,000 1,370,000 1,370,000 58.30%
2012 226.4 101.71% 2,280,000 2,319,074 1,375,000 1,398,564 59.51%
2011 219.1 105.10% 2,202,000 2,314,361 1,455,000 1,529,244 65.07%
2010 216.6 106.32% 2,125,000 2,259,211 1,455,000 1,546,895 65.83%
2009 215.3 106.96% 1,965,000 2,101,719 1,685,000 1,802,238 76.69%
2008 211.1 109.09% 1,855,000 2,023,541 1,237,500 1,349,936 57.44%
2007 202.4 113.77% 1,750,000 1,991,057 987,500 1,123,525 47.81%
2006 198.3 116.13% 1,390,000 1,614,166 987,500 1,146,755 48.80%
2005 190.7 120.76% 1,325,000 1,600,005 987500 1,192,457 50.74%
2004 185.2 124.34% 1,300,000 1,616,436 912500 1,134,614 48.28%
•The circled past values are
known, as is the current
value.
•Highlighted values may be
calculated by straight-line
depreciation or other means.
Second line of calculations
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Second line of calculations
Trend past values as needed
Year of Mfr CPI
Trend
Factor
Historic
Cost
Trended
HistoricPast Values
Trended
Past % of RCN
2013 230.28 100.00% 2,350,000 2,350,000 1,370,000 1,370,000 58.30%
2012 226.4 101.71% 2,280,000 2,319,074 1,375,000 1,398,564 59.51%
2011 219.1 105.10% 2,202,000 2,314,361 1,455,000 1,529,244 65.07%
2010 216.6 106.32% 2,125,000 2,259,211 1,455,000 1,546,895 65.83%
2009 215.3 106.96% 1,965,000 2,101,719 1,685,000 1,802,238 76.69%
2008 211.1 109.09% 1,855,000 2,023,541 1,237,500 1,349,936 57.44%
2007 202.4 113.77% 1,750,000 1,991,057 987,500 1,123,525 47.81%
2006 198.3 116.13% 1,390,000 1,614,166 987,500 1,146,755 48.80%
2005 190.7 120.76% 1,325,000 1,600,005 987500 1,192,457 50.74%
2004 185.2 124.34% 1,300,000 1,616,436 912500 1,134,614 48.28%
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Second line of calculations
Trend historical cost to RCN if needed
Year of Mfr CPI
Trend
Factor
Historic
Cost
Trended
HistoricPast Values
Trended
Past % of RCN
2013 230.28 100.00% 2,350,000 2,350,000 1,370,000 1,370,000 58.30%
2012 226.4 101.71% 2,280,000 2,319,074 1,375,000 1,398,564 59.51%
2011 219.1 105.10% 2,202,000 2,314,361 1,455,000 1,529,244 65.07%
2010 216.6 106.32% 2,125,000 2,259,211 1,455,000 1,546,895 65.83%
2009 215.3 106.96% 1,965,000 2,101,719 1,685,000 1,802,238 76.69%
2008 211.1 109.09% 1,855,000 2,023,541 1,237,500 1,349,936 57.44%
2007 202.4 113.77% 1,750,000 1,991,057 987,500 1,123,525 47.81%
2006 198.3 116.13% 1,390,000 1,614,166 987,500 1,146,755 48.80%
2005 190.7 120.76% 1,325,000 1,600,005 987500 1,192,457 50.74%
2004 185.2 124.34% 1,300,000 1,616,436 912500 1,134,614 48.28%
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Second line of calculations
Simple division
Year of Mfr CPI
Trend
Factor
Historic
Cost
Trended
HistoricPast Values
Trended
Past % of RCN
2013 230.28 100.00% 2,350,000 2,350,000 1,370,000 1,370,000 58.30%
2012 226.4 101.71% 2,280,000 2,319,074 1,375,000 1,398,564 59.51%
2011 219.1 105.10% 2,202,000 2,314,361 1,455,000 1,529,244 65.07%
2010 216.6 106.32% 2,125,000 2,259,211 1,455,000 1,546,895 65.83%
2009 215.3 106.96% 1,965,000 2,101,719 1,685,000 1,802,238 76.69%
2008 211.1 109.09% 1,855,000 2,023,541 1,237,500 1,349,936 57.44%
2007 202.4 113.77% 1,750,000 1,991,057 987,500 1,123,525 47.81%
2006 198.3 116.13% 1,390,000 1,614,166 987,500 1,146,755 48.80%
2005 190.7 120.76% 1,325,000 1,600,005 987500 1,192,457 50.74%
2004 185.2 124.34% 1,300,000 1,616,436 912500 1,134,614 48.28%
Divide Trended Past Value by
Trended Historic Cost.
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Reconciliation
It is possible to reconcile to a most probable value
Trended Historic (TH)
2,350,000
Current % of RCN * TH
Annual
depreciation
Most
Probable
Residual
Value Past % of RCN * TH
Annual
depreciation
100.00% 2,350,000 $2,350,000 100.00% 58.30% 1,370,000
95.06% 2,234,000 4.94% $2,234,000 95.06% 57.30% 1,346,458 0.86%
90.13% 2,118,000 4.94% $2,118,000 90.13% 56.29% 1,322,916 0.86%
85.19% 2,002,000 4.94% $2,002,000 85.19% 55.29% 1,299,374 0.86%
80.26% 1,886,000 4.94% $1,886,000 80.26% 54.29% 1,275,832 0.86%
75.32% 1,770,000 4.94% $1,770,000 75.32% 53.29% 1,252,290 0.86%
73.19% 1,720,000 2.13% $1,642,916 69.91% 52.29% 1,228,748 0.86%
71.06% 1,670,000 2.13% $1,515,832 64.50% 51.29% 1,205,206 0.86%
68.94% 1,620,000 2.13% $1,388,748 59.10% 50.28% 1,181,664 0.86%
66.81% 1,570,000 2.13% $1,261,664 53.69% 49.28% 1,158,122 0.86%
64.68% 1,520,000 2.13% $1,134,580 48.28% 48.28% 1,134,580 0.86%
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Reconciliation
Take the trended historic price as RCN
Trended Historic (TH)
2,350,000
Current % of RCN * TH
Annual
depreciation
Most
Probable
Residual
Value Past % of RCN * TH
Annual
depreciation
100.00% 2,350,000 $2,350,000 100.00% 58.30% 1,370,000
95.06% 2,234,000 4.94% $2,234,000 95.06% 57.30% 1,346,458 0.86%
90.13% 2,118,000 4.94% $2,118,000 90.13% 56.29% 1,322,916 0.86%
85.19% 2,002,000 4.94% $2,002,000 85.19% 55.29% 1,299,374 0.86%
80.26% 1,886,000 4.94% $1,886,000 80.26% 54.29% 1,275,832 0.86%
75.32% 1,770,000 4.94% $1,770,000 75.32% 53.29% 1,252,290 0.86%
73.19% 1,720,000 2.13% $1,642,916 69.91% 52.29% 1,228,748 0.86%
71.06% 1,670,000 2.13% $1,515,832 64.50% 51.29% 1,205,206 0.86%
68.94% 1,620,000 2.13% $1,388,748 59.10% 50.28% 1,181,664 0.86%
66.81% 1,570,000 2.13% $1,261,664 53.69% 49.28% 1,158,122 0.86%
64.68% 1,520,000 2.13% $1,134,580 48.28% 48.28% 1,134,580 0.86%
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Reconciliation
Use first line of calculations as long as stable
Trended Historic (TH)
2,350,000
Current % of RCN * TH
Annual
depreciation
Most
Probable
Residual
Value Past % of RCN * TH
Annual
depreciation
100.00% 2,350,000 $2,350,000 100.00% 58.30% 1,370,000
95.06% 2,234,000 4.94% $2,234,000 95.06% 57.30% 1,346,458 0.86%
90.13% 2,118,000 4.94% $2,118,000 90.13% 56.29% 1,322,916 0.86%
85.19% 2,002,000 4.94% $2,002,000 85.19% 55.29% 1,299,374 0.86%
80.26% 1,886,000 4.94% $1,886,000 80.26% 54.29% 1,275,832 0.86%
75.32% 1,770,000 4.94% $1,770,000 75.32% 53.29% 1,252,290 0.86%
73.19% 1,720,000 2.13% $1,642,916 69.91% 52.29% 1,228,748 0.86%
71.06% 1,670,000 2.13% $1,515,832 64.50% 51.29% 1,205,206 0.86%
68.94% 1,620,000 2.13% $1,388,748 59.10% 50.28% 1,181,664 0.86%
66.81% 1,570,000 2.13% $1,261,664 53.69% 49.28% 1,158,122 0.86%
64.68% 1,520,000 2.13% $1,134,580 48.28% 48.28% 1,134,580 0.86%
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Reconciliation
End with second line of calculations
Trended Historic (TH)
2,350,000
Current % of RCN * TH
Annual
depreciation
Most
Probable
Residual
Value Past % of RCN * TH
Annual
depreciation
100.00% 2,350,000 $2,350,000 100.00% 58.30% 1,370,000
95.06% 2,234,000 4.94% $2,234,000 95.06% 57.30% 1,346,458 0.86%
90.13% 2,118,000 4.94% $2,118,000 90.13% 56.29% 1,322,916 0.86%
85.19% 2,002,000 4.94% $2,002,000 85.19% 55.29% 1,299,374 0.86%
80.26% 1,886,000 4.94% $1,886,000 80.26% 54.29% 1,275,832 0.86%
75.32% 1,770,000 4.94% $1,770,000 75.32% 53.29% 1,252,290 0.86%
73.19% 1,720,000 2.13% $1,642,916 69.91% 52.29% 1,228,748 0.86%
71.06% 1,670,000 2.13% $1,515,832 64.50% 51.29% 1,205,206 0.86%
68.94% 1,620,000 2.13% $1,388,748 59.10% 50.28% 1,181,664 0.86%
66.81% 1,570,000 2.13% $1,261,664 53.69% 49.28% 1,158,122 0.86%
64.68% 1,520,000 2.13% $1,134,580 48.28% 48.28% 1,134,580 0.86%
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Reconciliation
SLN or appropriate choice of market depreciation from last
of 1st to 2nd line of calculations
Trended Historic (TH)
2,350,000
Current % of RCN * TH
Annual
depreciation
Most
Probable
Residual
Value Past % of RCN * TH
Annual
depreciation
100.00% 2,350,000 $2,350,000 100.00% 58.30% 1,370,000
95.06% 2,234,000 4.94% $2,234,000 95.06% 57.30% 1,346,458 0.86%
90.13% 2,118,000 4.94% $2,118,000 90.13% 56.29% 1,322,916 0.86%
85.19% 2,002,000 4.94% $2,002,000 85.19% 55.29% 1,299,374 0.86%
80.26% 1,886,000 4.94% $1,886,000 80.26% 54.29% 1,275,832 0.86%
75.32% 1,770,000 4.94% $1,770,000 75.32% 53.29% 1,252,290 0.86%
73.19% 1,720,000 2.13% $1,642,916 69.91% 52.29% 1,228,748 0.86%
71.06% 1,670,000 2.13% $1,515,832 64.50% 51.29% 1,205,206 0.86%
68.94% 1,620,000 2.13% $1,388,748 59.10% 50.28% 1,181,664 0.86%
66.81% 1,570,000 2.13% $1,261,664 53.69% 49.28% 1,158,122 0.86%
64.68% 1,520,000 2.13% $1,134,580 48.28% 48.28% 1,134,580 0.86%
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Reconciliation
Now look at it. Is it sensible? Realistic?
Trended Historic (TH)
2,350,000
Current % of RCN * TH
Annual
depreciation
Most
Probable
Residual
Value Past % of RCN * TH
Annual
depreciation
100.00% 2,350,000 $2,350,000 100.00% 58.30% 1,370,000
95.06% 2,234,000 4.94% $2,234,000 95.06% 57.30% 1,346,458 0.86%
90.13% 2,118,000 4.94% $2,118,000 90.13% 56.29% 1,322,916 0.86%
85.19% 2,002,000 4.94% $2,002,000 85.19% 55.29% 1,299,374 0.86%
80.26% 1,886,000 4.94% $1,886,000 80.26% 54.29% 1,275,832 0.86%
75.32% 1,770,000 4.94% $1,770,000 75.32% 53.29% 1,252,290 0.86%
73.19% 1,720,000 2.13% $1,642,916 69.91% 52.29% 1,228,748 0.86%
71.06% 1,670,000 2.13% $1,515,832 64.50% 51.29% 1,205,206 0.86%
68.94% 1,620,000 2.13% $1,388,748 59.10% 50.28% 1,181,664 0.86%
66.81% 1,570,000 2.13% $1,261,664 53.69% 49.28% 1,158,122 0.86%
64.68% 1,520,000 2.13% $1,134,580 48.28% 48.28% 1,134,580 0.86%
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Other considerations
Different rates of depreciation for options and extras
Trended Historic (TH)
2,350,000
Current % of RCN
Annual
deprec. Most Likely
Residual
Value
Optional
equipment Past % of RCN
Annual
deprec.
100.00% 2,350,000 $2,350,000 100.00% $ 300,000 58.30% 1,370,000
95.06% 2,234,000 4.94% $2,234,000 95.06% $ 250,000 57.30% 1,346,458 0.86%
90.13% 2,118,000 4.94% $2,118,000 90.13% $ 200,000 56.29% 1,322,916 0.86%
85.19% 2,002,000 4.94% $2,002,000 85.19% $ 150,000 55.29% 1,299,374 0.86%
80.26% 1,886,000 4.94% $1,886,000 80.26% $ 100,000 54.29% 1,275,832 0.86%
75.32% 1,770,000 4.94% $1,770,000 75.32% $ 80,000 53.29% 1,252,290 0.86%
73.19% 1,720,000 2.13% $1,642,916 69.91% $ 70,000 52.29% 1,228,748 0.86%
71.06% 1,670,000 2.13% $1,515,832 64.50% $ 65,000 51.29% 1,205,206 0.86%
68.94% 1,620,000 2.13% $1,388,748 59.10% $ 65,000 50.28% 1,181,664 0.86%
66.81% 1,570,000 2.13% $1,261,664 53.69% $ 65,000 49.28% 1,158,122 0.86%
64.68% 1,520,000 2.13% $1,134,580 48.28% $ 65,000 48.28% 1,134,580 0.86%
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Other considerations
Different ages of parts of
line or asset:2008 Sikorsky S92A,
Corporate/VIP
configured, factory
demonstrator
Purchased in 2011
Corporate configuration
removed, replaced
with offshore interior
Interior is 3 years
younger than the
airframe
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Other considerations
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Questions?
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