An Alternative Multiple Contracts Version of the SACRE
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
de Faro, C., & Lachtermacher, G. (2023). A Multiple Contracts Version of the SACRE. London Journal of Research in Management and Business, 23(6), 15-27. London, England.
de Faro, C., & Lachtermacher, G. (2022). O SACRE no Regime de Juros Compostos. Estudos e Negócios Academics, 4, 5-18. São Paulo, Brazil
de Faro, C. (1974). On the Internal Rate of Return Criterion. The Engineering Economist, 7(2), 165-194.
Norstrom, C.(1972). A Sufficient Condition for a Unique Nonnegative Internal Rate of Return. Journal of Finacial and Quantitative Analysis, 7(3), 1835-1839.
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