Lessor's analysis
Lessor's analysis is an analysis that involves determining the rate of return on the proposed lease. If the internal rate of return of the lease cash flows exceeds the lessor's opportunity cost of capital, then the lease is a good investment. This is equivalent to analyzing whether the net present value of the lease is positive.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Lessor's analysis. Involves determining the rate of return on the proposed lease. If the internal rate of return of the lease cash flows exceeds the lessor's opportunity cost of capital, then the lease is a good investment. This is equivalent to analyzing whether the net present value of the lease is positive.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
