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RR did submit this in the review that there should be that...

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Mexicanandre

112 Posts.

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20/10/18

18:55

Post #: 36198420
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Originally posted by Pioupiou: ↑

The statutory exclusion of an option to buy the rented goods is dysfunctional. This should be an option open at any time, which would allow RR to construct a formula to derive the resultant selling price, which could be linked to the depreciation of the underlying asset, and hence be zero, or near-zero, after the expiry of the rental term. I initiated a communication on this issue with Management a few years ago, and the then CEO was interested in the concept, but the statutory preclusion of such an option ensured that the matter went nowhere. If a cash-strapped lessee has an infusion of cash from any source, that money cannot be used to buy-out the lease at a contractually prescribed formulaic price.

Although the formula would probably be set to give RR a lower profit in some cases, the financial advantages of the marketing benefit would eclipse the occasional negative effect. The reality would probably be that customers would be strongly tempted to blow any cash windfalls on other things, and let the rental term run to expiry.

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RR did submit this in the review that there should be that option.

I believe a lot of other rental companies also submitted this. It wasn't accepted.

TGA Price at posting: 55.5¢ Sentiment: None Disclosure: Not Held
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