As a Practical Matter, the Lessee Uses a Single Discount

question 100

Multiple Choice

As a practical matter, the lessee uses a single discount rate for lease analysis, but a more refined approach would do which of the following?

• A)use a different discount rate for every line on the lease analysis' cash flows, and so reflect differing risk for each cash item.
• B)use a zero discount rate for the lease payment, a high rate only for the CCA tax benefits, and a middle rate for the other cash flows.
• C)use one discount rate for the lease tax shelter, and another for the other cash flows.
• D)use a low, middle, and high discount rate and pick the average result.

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Definitions:

Ice

Water frozen into a solid state, typically at or below 0°C (32°F).

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The transformation of water from liquid to gas phase, occurring at 100°C (212°F) at sea level.

Hydrogen Ions

Positively charged atoms of hydrogen, which contribute to acidity when present in high concentrations in solutions.

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Substances that release hydrogen ions (H+) when dissolved in water, typically having a sour taste and capable of turning blue litmus paper red.