The Relevant Discount Rate for Evaluating a Lease Is the Firm's

question 64

Multiple Choice

The relevant discount rate for evaluating a lease is the firm's:

• A)cost of equity financing.
• B)pre-tax cost of borrowing.
• C)aftertax cost of borrowing.
• D)cost of working capital.
• E)rate of return on short-term assets.

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Definitions:

Merchandise

Goods brought into a store for resale to customers.

Purchase Discounts

Reductions in price given by a supplier to a buyer for early payment within a specified period.

Purchase Discounts Lost

The additional expense a company incurs when it fails to take advantage of discounts offered by suppliers for early payment.

Voucher Register

A voucher register is a record keeping system where vouchers are indexed and stored, detailing the payment of a transaction.