FIN 620-session7 agenda

FIN 620-session7 agenda - FIN 620 Capital Markets,...

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FIN 620 Capital Markets, Institutions, and Long-Term Financial Management Session 7  Agenda 1. Lecture Notes/Comments 2. Power points 3. Self Study Materials 4. Homework 5. Group Project 6. Class Discussion 1. Lecture Notes/Comments RWJ, Chapter 21 In Chapter 21 we discuss the institutional arrangements surrounding leases and showed how to evaluate leases financially. Leases can be separated into two polar types . Though o perating leases allow the lessee to use the equipment, ownership remains with the lessor. Although the lessor in a financial lease legally owns the equipment, the lessee maintains effective ownership because financial leases are fully amortized. When a firm purchases an asset with debt, both the asset and the liability appear on the firm's balance sheet. If a lease meets at least one of a number of criteria, it must be capitalized ( capital leases ). This means that the present value of the lease appears as both an asset and a liability. A lease escapes capitalization if it does not meet any of these criteria. Leases not meeting the
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This note was uploaded on 02/14/2011 for the course FINANCE 620 taught by Professor Halstead during the Fall '09 term at UMBC.

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FIN 620-session7 agenda - FIN 620 Capital Markets,...

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