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Case
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Reference no. UVA-F-0969
Subject category: Finance, Accounting and Control
Authors: Kenneth M Eades (Darden School of Business, University of Virginia)
Published by: Darden Business Publishing
Originally published in: 1991
Version: 04.2001
Length: 13 pages
Data source: Field research
Topics: Cost of capital; Leasing; Liability management; Valuation
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Abstract

The director of equipment finance at Burlington Northern Railroad Company must decide if a leveraged lease proposal is acceptable. The case emphasizes the importance of the lessee''s tax status to the value of the lease and how the perception of residual value affects the valuation for both the lessee and lessor. To value the lease properly, the student must identify the relevant cash flows and the appropriate discount rates for those flows.
Location:
Fort Worth, TX
Industry:
Railroad
Size:
USD4,600 million
Other setting(s):
1990
Teaching note
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Reference no. UVA-F-0969TN
Subject category: Finance, Accounting and Control
Authors: Kenneth M Eades (Darden School of Business, University of Virginia)
Published by: Darden Business Publishing
Originally published in: 1991
Version: January 1999
Length: 14 pages
View full details

About

Abstract

The director of equipment finance at Burlington Northern Railroad Company must decide if a leveraged lease proposal is acceptable. The case emphasizes the importance of the lessee''s tax status to the value of the lease and how the perception of residual value affects the valuation for both the lessee and lessor. To value the lease properly, the student must identify the relevant cash flows and the appropriate discount rates for those flows.

Settings

Location:
Fort Worth, TX
Industry:
Railroad
Size:
USD4,600 million
Other setting(s):
1990

Related

Teaching note
-
Reference no. UVA-F-0969TN
Subject category: Finance, Accounting and Control
Authors: Kenneth M Eades (Darden School of Business, University of Virginia)
Published by: Darden Business Publishing
Originally published in: 1991
Version: January 1999
Length: 14 pages
View full details