As a Practical Matter, the Lessee Uses a Single Discount

question 64

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