A.Lenders to leveraged leases hold nonrecourse debt. What does “nonrecourse” mean? What are the benefits and costs of nonrecourse debt to the equity investors in the lease? B. How does a leveraged...

mean? What are the benefits and costs of nonrecourse debt to the equity investors in the lease?

B.
How does a leveraged lease differ from an ordinary, long-term financial

lease? List the key differences.

C.
How would the lessee in Figure 25.1 evaluate the NPV of the lease? Sketch

the correct valuation procedure. Then suppose that the equity lessor wants to evaluate the

lease. Again sketch the correct procedure. (Hint:
APV. How would you calculate the combined

value of the lease to lessee and lessor?)