Purchase Solution

Lease Analysis - Agro-Chem with Lonestar

Not what you're looking for?

Ask Custom Question

Hello, i need help solving problem wo, attached is the case.

10.
There is a possibility that Agro-Chem will move to its new production facility earlier than anticipated, and hence prior to the expiration of the lease. Thus, Audrey is considering asking Lonestar to include a cancellation clause in the lease contract. What impact would a cancellation clause have on the riskiness of the lease to Agro-Chem? How would it affect the risk to Lonestar? If you were Lonestar's leasing manager, would you change the lease terms if a cancellation clause were added? If so, what changes might be made?

Attachments
Purchase this Solution

Solution Summary

The solution has the details for the Agro-Chem lease case with Lonestar with a discussion on the risks associated with having a cancellation clause in the lease

Solution Preview

A cancellation clause would lower the risk of the lease to the lessee but raise the lessor's risk.
To account for this, the lessor would increase the annual lease payment or else impose a penalty for early cancellation. A cancellation option is clearly valuable as it permits response to changing market conditions.

A ...

Purchase this Solution


Free BrainMass Quizzes
Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.