Study On The Pricing And Profit Of Finance Lease

Financial leasing has becoming an important financial mean to combine financial fund with assets since it came into being in 1950 s. With the development of finance, financial leasing company has a big development. At the beginning, the business of financial leasing company occurs under the supervision of the Ministry of Commerce. Lately, Banks and other institutions come into this area and Banking Regulatory Commission becomes to supervise these companies in banking systems. Compared with traditional financial leasing companies, financial leasing companies have enough funds and a wider range of customers, which is difficult for traditional company to compare. As a result, financial leasing companies have a big development since they come into being.However, the development of financial leasing in China is just at the beginning stage, for the laws and regulations, management models, the standards of business, risk management are not mature. In financial leasing area, there is a big gap between our country and those developed-countries, especially the research on rent pricing and calculating profits. So, there is still a lot we can do in this area.We start from the lessor and the lessee aspects and build a model to calculate the maximum and minimum rent. In this model, the main factors that influence the lessor are discount rate, the value of equipment and the minimum acceptable rate of return. As for the lessee, they are commissions, the cost of upkeep, the rate of return and income. Considering the depreciation cost and the modes of payment, we improve our normal model later. Then, considering the influence of the fluctuation in interest rate, we use Black-Scholes-Merton Models to reappraise the profits of the lessor and use Asian option to optimize it. For every financial leasing business, the lessor may face some risks. Next, we analysis the main risk and locate on default risk. Considering the relationship between the assets of the lessee and the rent, we adjust the rent if we predict that there is a default risk, so the lessor can recoup its losses. Lately, we use real option to optimize the variables. After that, by analyzing the Future value and the sale income of the lessee, we add the contingent rent to the normal model. Then we have a qualitative analysis about the influence of exchange rates and financial obligations on the rent. The last part is some policy recommendations about distribution of a company’s assets and liabilities, subdivision of market and customers, preventing default risk and interest risk, making use of the internet.