If you purchase the vehicle at the end of the lease and your lease states that the purchase-option price is the fair market value, you may pay more or less than the residual value. If you pay more, you will have paid more than the initial gross capitalized cost (the intitial "price" of the vehicle) when you add the purchase price to the initial capitalized cost reduction plus the depreciation and any amortized amounts you paid over the term. If the residual value in the lease agreement is lower than the projected residual value in a standard industry residual-value guidebook, there is a higher probability that the fair market value purchase-option price will be higher. The fair market value price can be either a wholesale or a retail amount, usually published in a used-car guidebook. The definition of the fair market value purchase-option price will also affect the probability that the purchase price will be greater than (or less than) the residual value. Example