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When the data points are scattered,variance is small.
Implicit Rate
An interest rate implicit in the terms of a lease or other contract, representing the lessor's cost of capital or the lessee's incremental borrowing rate, not explicitly stated.
Leveraged Lease
A leasing arrangement in which the lessor uses borrowed funds to acquire the asset that is then leased out, allowing the lessor to benefit from tax advantages and leverage.
Operating Lease
A contract that allows for the use of an asset but does not transfer ownership of the asset to the lessee.
Capital Lease
A financial agreement where a lessee gains significant property rights, making it similar to owning the asset, for accounting purposes.
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