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Direct Financing Lease. A lessor capital lease that does not give rise to manufacturer’s or dealer’s profit (or loss) to the lessor.
Discounted Cash Flow Analysis. Comparison of cash flows resulting from two or more investment or payment obligation alternatives by calculating the "present value" of each, using the same discount rate.
Economic Life Of Leased Property. The estimated period during which the property is expected to be economically useful by one or more users, with normal repair and maintenance, or the purpose intended at the inception of the lease.
End-Of-Term Options. Options stated in the lease agreement that give the lessee flexibility in its treatment of the leased asset at the end of the lease. Common end-of-term options include purchasing the asset, renewing the lease or returning the property to the lessor.
Estimated Residual Value. The forecasted "fair market value" of the leased asset, used for purposes of calculating the maximum allowable term of a tax-oriented lease. Calculated in constant dollars (excluding inflation and deflation).
Estimated Useful Life. The period, during which an asset is expected to be useful in a trade or business, used for calculation of the maximum allowable term of a tax-oriented lease.
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