In the leasing discussion, James informs Nick that the contract could include a purchase option for the equipment at the end of the lease. Hendrix Leasing offers three purchase options:

a. An option to purchase the equipment at the fair market value.

b. An option to purchase the equipment at a fixed price. The price will negotiated before the lease is signed.

c. An option to purchase the equipment at a price of $250,000.

How would the inclusion of a purchase option affect the value of the lease?

 LO.1