LEVERAGED LEASING

Authors :: Maria Andrada Georgescu
Source :: BASE-Bielefeld Academic Search Engine
Abstract: If the asset is very costly, it may be convenient to arrange a leveraged lease, in which the cost of the leased asset is financed by issuing debt and equity claims against the asset and the future lease payments. If one knows the financing mix that will be used by the lessor, the rate of return on the lease payments, and the (lower) rate of return received by debt holders in the contract, then it is possible to estimate the required rate of return on equity invested in leveraged leases.