Lease Financing
a contractual arrangement where a business (the lessee) obtains the right to use an asset owned by another party (the lessor) for a specified period in exchange for periodic payments. The ownership of the asset remains with the lessor, while the lessee enjoys its benefits during the lease term
Lease Financing
The owner of the asset.
Lessor
The user of the asset
Leesee
also known as a capital lease, is a long-term leasing arrangement where the lessee effectively assumes most of the risks and rewards associated with asset ownership, even though legal ownership remains with the lessor.
Finance Lease
is a leasing arrangement where the lessee uses an asset for a shorter duration compared to its useful life, without assuming ownership or significant risks and rewards associated with the asset. Unlike a finance lease, the ownership and risks remain with the lessor, and the asset is not recorded on the lessee’s balance sheet.
Operating Lease
The initial value of the asset being leased.
Asset Cost
The expected value of the asset at the end of the lease term (for finance leases.
Residual Value
The duration over which the asset is leased.
Lease Term
The rate at which the lessor charges for providing the asset.
Interest rate
formula is used to determine the present value of a series of equal payments (annuity) made at regular intervals. It's useful when you know the periodic payments but want to find out how much those payments are worth today, based on a given interest rate.
Present Value of Annuity