Term
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Definition
a contractual agreement between a lessor and a lessee. Lessor givers lesse right to use property for a period of time in return for rental payments by lessee over this period. |
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Term
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Definition
Allows the lessee to renew the lease for a rental that is lower than the expected fair rental at the date the option becomes exercisable.
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Term
Guaranteed Residual Value |
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Definition
The residual value is the estimated fair market value of the leased property at the end of the lease term.. ILFC may transfer the risk of loss to Delta or to a thrid party by obtaining a guarantee of the estimated residual value. The guaranteed residual value is either:
- the certain or determinable amount that Delta will pay ILFC at the end of the lease to purhase the aircraft at the end of the lease or
- the amount Delta or the third party guarantees that ILFC will realize if the aircraft is returned.
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Term
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Definition
are insurers who for a fee assume the risk of deficiencies in leased asset residual value |
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Term
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Definition
- Insurance
- Maintenance
- Tax Expenses
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Term
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Definition
| An option given to Delta to purchase the aircraft at the end of the lease term at a price that is fixed sufficiently below the expected fair value, so that, at the inception of the lease, purchase is reasonably assured |
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Term
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Definition
Delta computes the PV of the minimum lease payments using its incremental borrowing rate.
This rate is defined as:
"The rate that at the inception of the lease, the lessee would have incurred to borrow the funds necessary to buy the leased asset on a secured loan with repayment terms similar to the payment schedule called for in the lease." |
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