walk away

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References in periodicals archive ?
When the leased car is assumed to be purchased at the end of the lease, all of the cash flows from the purchase and open-end lease alternatives are certain, while the lease purchase option prices are uncertain for the closed-end leases. Again, this is not a problem if the consumer is assumed to be risk neutral - the uncertain cash outflows can be replaced by their expected values and the expected values can be discounted using the interest rate r.
To illustrate this procedure, data on guaranteed buy back and fair market value closed-end leases were obtained from a Honda dealership in the Greenville, South Carolina metropolitan area.
Data for [P.sub.0] ($1,000s); [P.sup.*] ($1,000s); T (months); up-front leasing cost, [D.sub.L]($1,000s); refundable lease security deposit, S ($1,000s); and the monthly lease payment, [M.sup.L] ($1,000s) for closed-end leases with guaranteed buy backs were collected from advertisements appearing in June 1993 issues of the Greenville News, The State, and The Wall Street Journal newspapers.(6) Complete information was available for 33 different leases.
Closed-end leases require a fixed number of payments for a specified number of months, and at the end of this payment period the lessee simply returns the leased asset to the lessor.
A recent new car sales promotion offered potential customers the choice between (1) a 66-month closed-end lease, or (2) a 60-month installment financing contract for a 1988 BMW Model 528e.