A firm is considering leasing. The firm can borrow at 9%, and the corporate tax rate is
30%) What is the discount rate for valuing the lease?

Name: A firm is considering leasing. The firm can borrow at 9%, and the corporate tax rate is 30%) What is the discount rate for valuing the lease?
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Question

Quizplus · Accepted Answer

The discount rate for valuing the lease is calculated as follows: 
Discount rate = loan rate x (1 - tax rate) 
Discount rate = 0.09 x (1 - 0.30) 
Discount rate = 0.063 or 6.3% 
Therefore, the best choice is D.

A Firm Is Considering Leasing