The SuperTRUMP Premium Edition adds an Optimizer that makes sophisticated mathematical algorithms available from within the familiar SuperTRUMP interface.
The Premium Edition, with its optimization tools is the ultimate lease pricing software.
THE OPTIMIZER
The Optimizer, previously known as part of the SuperTRUMP Linear
Programming (LP) Version, is a powerful extension to the financial modeling
capabilities of the SuperTRUMP program.
The Concept
Optimization is a process through which the single "mathematically best" solution is found. To the user unfamiliar with optimization, perhaps
the best way to conceptualize it is to compare it to the target feature
in SuperTRUMP.
Targeting is a guided series of iterations in which one variable is adjusted until another measure achieves a desired ("target") value. Optimization adds another dimension to this process. While it achieves a target value, it actually adjusts many variables all at once until the desired optimization objective is maximized. The number of variables that are adjusted depends on the complexity of the transaction, and on the additional constraints that are imposed on the model. The optimization objective may be either maximization (e.g., after-tax cash, while using a known rent structure) or minimization (e.g., PV of rents while solving for rents).
The Capabilities
To illustrate, consider a 5-year lease with quarterly rents in
arrears. When targeting a yield of 7%, one is trying to find the single
amount which, when used for all 20 rents, achieves that yield. (To be
sure, SuperTRUMP's targeting feature is not needed to find this amount;
one can just use successive guesses, letting each result guide the next
try.) When using the Optimizer, however, each of the 20 rents can vary
independently of the others.
Since there are countless ways that these 20 rents could be structured to achieve this yield, more guidance is necessary to identify the optimal solution. That guidance is provided by the optimization objective, which in this case is the minimization of the PV of rent. Each different combination of rents that meets or exceeds our 7% yield has a unique PV of rents, and the lowest value identifies the optimal solution.
Compared to the level rent structure, the optimized structure will have a significantly lower PV of rents, making the bid more attractive to lessees. In similar fashion, other aspects of a lease can be optimized, including leverage, early buyouts, and rent timing (including prepaid/deferred).
In some situations, specific constraints will also need to be met. Using the Optimizer, this can be done by activating standard constraints, or through "user-defined constraints," which enable the user to formulate a variety of constraints on program quantities.
