If a Firm Can Borrow at 9%,what Discount Rate Should

question 15

Multiple Choice

If a firm can borrow at 9%,what discount rate should the firm use to discount lease cash flows? (The marginal tax rate for the firm is 35%.)

• A)3.15%
• B)5.85%
• C)9.00%
• D)0.00%

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Definitions:

Job F

Based on context, this could refer to a specific job identifier in job costing, tracking costs and revenue associated with a particular job.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production, based on a selected activity base.

Direct Labor-hour

The number of labor hours spent on the direct production of goods or services.

Manufacturing Overhead

Costs incurred from the manufacturing process, which exclude both direct labor and materials, are categorized as indirect costs.