- Fair Market Value Purchase Option
The right but not the obligation to buy a leased asset at the end of the lease term for a price that represents the item's then-current worth. The Fair Market Value Purchase Option does not provide the purchase price in advance, but as long as the assessed fair market value is accurate, the consumer will not overpay for the asset and the lessor will not receive less than the asset is worth.
Types of assets that may come with a fair market value purchase option include automobiles, real estate and heavy equipment.
A common alternative to the fair market value purchase option is the fixed price purchase option, which allows the lessee to know for certain what the cost to purchase the property at the end of the lease term will be. Because it is impossible to determine an item's fair market value in advance of the item's purchase date, a purchase price cannot be established in advance with a fair market value purchase option.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
Fixed Price Purchase Option — The right, but not the obligation, to buy a leased item at a predetermined price. With a fixed price purchase option, the purchase price is established when the lease terms are agreed upon. The lease agreement should also describe when the option … Investment dictionary
Bargain Purchase Option — An option in a lease agreement that allows the lessee to purchase the leased asset at the end of the lease period at a price substantially below its fair market value. The bargain purchase option is one of four criteria, any one of which, if… … Investment dictionary
value — The utility of an object in satisfying, directly or indirectly, the needs or desires of human beings, called by economists value in use, or its worth consisting in the power of purchasing other objects, called value in exchange. Joint Highway… … Black's law dictionary
option — Right of election to exercise a privilege. Contract made for consideration to keep an offer open for prescribed period. A right, which acts as a continuing offer, given for consideration, to purchase or lease property at an agreed upon price and… … Black's law dictionary
Fair trade — For other uses, see Fair trade (disambiguation). Fair trade is an organized social movement and market based approach that aims to help producers in developing countries make better trading conditions and promote sustainability. The movement… … Wikipedia
Value added tax — Taxation An aspect of fiscal policy … Wikipedia
Mark-to-market accounting — Accountancy Key concepts Accountant · Accounting period · Bookkeeping · Cash and accrual basis · Cash flow management · Chart of accounts … Wikipedia
Employee stock option — An employee stock option is a call option on the common stock of a company, issued as a form of non cash compensation. Restrictions on the option (such as vesting and limited transferability) attempt to align the holder s interest with those of… … Wikipedia
Bargain-purchase-price option — Gives the lessee the option to purchase the asset at a price below fair market value when the lease expires. The New York Times Financial Glossary … Financial and business terms
Whole Foods Market — Infobox Company company name = Whole Foods Market company company type = Public (nasdaq|WFMI) company slogan = foundation = 1980 (Austin, Texas) location = Austin, Texas key people = John Mackey, CEO Glenda Chamberlain, Executive Vice President… … Wikipedia