What influences lease rates set by the lessor?
Other things being equal, the following will cause lease rates to rise: • Using depreciation methods that reduce the amount of depreciation expense over the earlier years of a lease. For example, using straight line depreciation over MACRS in the US or straight line over CCA methods in Canada. • Increasing the required rate of return (the discount rate). • Increasing the number of payments by going to semiannual, quarterly, or monthly payments instead of yearly payments.
