The Relevant Discount Rate to Use in a Lease-Purchase Analysis

question 177

Multiple Choice

The relevant discount rate to use in a lease-purchase analysis is the:

• A) Pre-tax borrowing rate.
• B) After-tax borrowing rate.
• C) Firm's weighted average cost of capital.
• D) Current risk-free rate of return.
• E) Firm's pre-tax weighted average cost of capital

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Definitions:

SST

In statistics, SST stands for Total Sum of Squares, which is a measure of the total variance in a dataset, representing the sum of squared differences from the mean.

One-Way ANOVA

A statistical test that assesses whether there are any statistically significant differences between the means of three or more independent (unrelated) groups.

F Statistic

A ratio used in the analysis of variance (ANOVA) to determine whether the means of several groups are equal.

ANOVA Table

A table used in analysis of variance that shows the sources of variability in the data and helps in determining whether there are significant differences between group means.