Abstract
Despite the growing popularity of consumer automobile leases, they remain poorly understood by many consumers. This teaching note describes a possible spreadsheet assignment based on an ordinary automobile lease advertisement. With careful analysis of the proposed lease, several important fmancial concepts are revealed, including: internal rate of return, net advantage to leasing, opportunity cost, sunk costs, liquidity, equivalent annual cost, crossover rate, and real option value. By using the familiar and relatable auto lease example, student engagement with the material is improved. The examples and associated problems given are suitable for intermediate-level students of managerial finance, personal finance, or capital budgeting.
Recommended Citation
(2026)
"Using the Automobile Lease to Illustrate Topics in Corporate Finance,"
Journal of Economics and Finance Education: Vol. 15:
Iss.
1, Article 6.
Available at:
https://scholarship.rollins.edu/jefe/vol15/iss1/6
