An Alternative Multiple Contracts Version of the SACRE

Clovis de Faro; Gerson Lachtermacher

doi:10.30560/jems.v6n2p19

Clovis de Faro Graduate School of Economics, EPGE-FGV, Rio de Janeiro, Brazil
Gerson Lachtermacher Associated Professor UERJ, retired, and Strong Business School researcher

DOI: https://doi.org/10.30560/jems.v6n2p19

Keywords: amortization systems, multiple contracts amortization system

Abstract

Taking into consideration that the SACRE (system of increasing amortization in real terms), as originally instituted by Caixa Econômica Federal, is not financially consistent, an exact procedure, denoted as SACRE*, was proposed in de Faro and Lachtermacher (2022). An alternative version (SACRE-F) of this system was proposed by Forger (2010). The present paper submits a multiple contract version of SACRE-F. It is shown that, taking into due account the financial institution cost of capital, it is always better to implement the multiple contracts approach instead of the single contract option. An comparison between the both alternatives are detailed.

References

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