what are minimum lease payments 
the minimum lease payment is the lowest amount that a lessor can expect to make and a lessee can expect to pay over the lifetime of the lease accountants calculate minimum lease payments in order to assign a present value to a lease in order to record the lease properly in the company s books the method of calculating minimum lease payments is laid out in the statement of financial accounting standards no 13 fas 13 accounting for leases which was published by the financial accounting standards board fasb in 1980 the formula for minimum lease payments and lease valuationthe present value formula encompasses the minimum lease payments and the value of the total lease leased equipment often has a residual value at the end of the lease term which is an estimate of the amount of value remaining in the leased asset p v i 0 n p m t i 1 r r e s 1 r n where p v present value of the minimum lease payments p m t i lease payment for period i r interest rate n number of payment periods r e s residual amount begin aligned pv sum i 0 n left frac pmt i left 1 r right right frac res left 1 r right n textbf where pv text present value of the minimum lease payments pmt i text lease payment for period i r text interest rate n text number of payment periods res text residual amount end aligned pv i 0 n 1 r pmti 1 r nres where pv present value of the minimum lease paymentspmti lease payment for period ir interest raten number of payment periodsres residual amount 