Leases are complex contractual arrangements to grant the use of specific fixed assets for a specified time in exchange for a series of payments. There are several types of leases—operating lease, financial lease, sale and leaseback, and leveraged lease. This chapter focuses mainly on the study of financial leases. Lease contracts are analyzed using the net present value approach. The analysis is done both from the lessee’s point of view and lessor’s point of view.
