constant yield method (or actuarial method)
- The approach for earning rent charges where each month's rent charge aligns with the remaining lease balance, resulting in an even distribution of rent charges over the lease duration, much like how interest is earned in many initial mortgages
- The constant yield method is applied by the leasing company to gradually earn rent over the lease term.
- With the use of the constant yield method, the monthly rent charge aligns with the remainder of the lease balance.
- Similar to interest accrual in initial mortgages, the constant yield method ensures equal distribution of rent charges over the lease period.