We propose an integrated reduced-form model to calculate the values of adjustable-rate leases with an embedded cancellation option, a purchase option, and default risk. Most previous researches use a structural-form model to value lease contracts. With this method, however, it is difficult to identify the critical region of exercising embedded options in empirical study. As an alternative, the reduced-form model developed in this paper is able to value lease contracts without setting boundary conditions, and it thereby provide an implementable framework to handle several state variables in empirical study. To show the value of embedded options and comparative statics, we conduct a numerical analysis. In our numerical example we show that for a 30-year lease contract, the lessor will offer a 15% discount in the initial rent for the rate adjustment, but will charge an additional 12.16% for the purchase option, 33.14% for the cancellation option, and 20.73% for default risk compared with the non-defaultable one without embedded options. This result suggests that ignoring embedded options in valuing a lease contract leads to significant pricing errors. Thus, our model provides a flexible and implementable framework to value complex lease contracts.