Details

Autor(en) / Beteiligte

• Bodmer, Edward

Titel

Modeling Maintenance Reserve Accounts

Ist Teil von

• Corporate and Project Finance Modeling, 2014, p.555-562

Ort / Verlag

Hoboken, New Jersey: John Wiley & Sons, Inc

Erscheinungsjahr

2014

Link zum Volltext

Quelle

Wiley Online Library All Obooks

Beschreibungen/Notizen

• This chapter addresses programming issues associated with maintenance reserve accounts that require money to be put aside for major maintenance projects. As with debt service reserve accounts, putting money aside in a maintenance account generally reduces the equity IRR because money in the reserve account earns a low rate of return. Complex programming issues associated with a maintenance reserve account include finding variable periods in which maintenance occurs, looking ahead to find the amount of money that should be contributed to the account and making adjustments to reserve contributions in the latter part of the loan life. MRA issues are introduced with a simple case where the maintenance expenditure is constant and the time period between expenditures is also constant. In this case you can create a timing switch to find the maintenance period using the mod function. Contributions to the MRA can be computed and then an MRA balance can be set up. Capital expenditures or operating expenses should be adjusted in the model and the cash flow waterfall should include adjustments for MRA contributions and with drawls. If the level of expenditures inflates, the MRA contributions should look forward and then divide this prospective expenditure by the number of periods between expenditures. This can be accomplished by using the offset function. If the period between expenditures is not constant, the match function can be used to make an expenditure switch and the index function can be used to establish the prospective expenditure.