Present Value of Lease Payments Calculator

PV = each lease payment discounted back to today using the lessee's incremental borrowing rate (or the rate implicit in the lease, if known), summed over the full lease term — the standard present-value-of-annuity formula, adjusted for whether payments occur at the start or end of each period.

ASC 842 requires the rate implicit in the lease if it's readily determinable; otherwise, use your company's incremental borrowing rate (IBR) — the rate you'd pay to borrow a similar amount, for a similar term, secured similarly, in a similar economic environment.

Most operating and finance leases require payment in advance (an 'annuity due'), which produces a slightly higher present value than payments in arrears (an 'ordinary annuity'), since each payment is discounted for one less period.

No — this calculates the present value of the fixed periodic lease payments only. Residual value guarantees, purchase options reasonably certain to be exercised, and variable payments based on an index would need to be added separately per ASC 842's full measurement guidance.