The IBR is defined as the interest rate the lessee would have to pay to borrow the valueof the asset over a similar term length and with similar security.
To calculate the IBR:
- Determine the corporate borrowing rate and adjust if for security as well as any foreign currency adjustment.
- If the company does not have a corporate borrowing rate, use a borrowing rate for an index the company is part of, or something similar, and adjust it for the company.
Treasury will be instrumental in this process as they will likely already hold some of the data needed tocalculate the IBR.