What Is The Effective Rate Of Interest Implicit In The Agreement

If you treat leases in accordance with IAS 17 Leases, FAS 13 or any other applicable standard, you will know that the lease must first or later be measured against the interest rate implied in the lease. In other words, if you use the interest rate implicit in the lease, you apply the actuarial method to shift individual lease payments between principal repayment and interest. Well, that`s fine, but what is it and how do you calculate it? The interest rate on your loan is 8.122%. If you update all refunds of this rate, the sum will give you exactly 9,000 EUR: this article deals with the topic “Understanding the discount rate” [ 78 kb ]. IFRS 16 “Leases” requires discount rates to determine the present value of lease payments used to measure a tenant`s rental liabilities. Discount rates are also used to determine the classification of a lessor`s leases and measure a lessor`s net investment in a lease. . . .