If the Interest Rate on Debt Is R_D, What Discount

question 33

Multiple Choice

If the interest rate on debt is r_D, what discount rate should the company use when valuing financial leases? The marginal tax rate is T_c.

• A)r_D(1 − T_c)
• B)r_DT_c
• C)r_D
• D)1 − r_DT_c

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Definitions:

Wholesaler

A person or company that sells goods in large quantities at lower prices, typically to retailers for resale to the public.

Retailer

An entity or individual that provides products directly to buyers, instead of selling them through a wholesaler or supplier who typically distribute their goods to other businesses.

Private Branding

A strategy where a retailer sells products under its own brand name, rather than the name of the manufacturer.

Store Brands

Products that are branded and sold by a retailer under its own label.