A Firm Is Considering Leasing

question 23

Multiple Choice

A firm is considering leasing. The firm can borrow at 9 percent, and the marginal corporate tax rate is 21 percent. What is the discount rate for valuing the lease?

• A)9 percent
• B)30 percent
• C)2.7 percent
• D)7.11 percent

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Definitions:

Regular Rate

Typically refers to the normal hourly rate paid for standard work hours to an employee, not including overtime or bonuses.

Rate of Pay

The amount of money a person is paid per unit of time, such as an hourly wage or annual salary.

Hourly Pay Rate

The compensation given for each hour of labor.

Average Rate

A value representing the middle point of a rate over a specified period, often calculated by summing rates and dividing by the number of rates.