A finance lessor's interest earnings each year are generally
found by attributing the total 'interest' receivable over the whole
period of the lease to each period of account proportionately to
the capital outstanding in each period. This produces a declining
amount of net profit each year where the rentals are structured
like a repayment mortgage. This is because the 'loan' owed by the
lessee at the outset gradually reduces. Hence the high loan figure
in the early years allocates proportionately more 'interest'
earnings to those years and vice versa for the later years.
