FRA- Lease multiplier understand, represents, different, financing, displays

BC_MBA_student

Hey everyone,

I came across a case study in FRA that I did not understand, was wondering if anyone read it yet. On page 456 a discussion of off balance sheet financing is discussed and the quant analyst in the case uses a "7.4"lease multiplier to filter through different leases.

Then again on p.457 a table displays the 7.4 as a "lease multiplier". what is a lease multiplier and where does he come up with this number? I read on 456 that is an number that represents the PV of lease payments at 6% for ten years but i still dont know what that means.

Can anyone shed some light please?

Thank u

DSquaredSlim

appreciated, thanks, i feel silly now