Since the lease payment is fixed and other costs associated with the lease (salvage value, operating expenses, and interest rates) are highly uncertain, it is important to evaluate the _______________ rate for a lease-versus-buy decision.

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The implicit interest rate is the rate that equates the present value of lease payments to the present value of the leased asset. It takes into account all the uncertain costs associated with the lease and provides an effective comparison to the cost of financing a purchase of the same asset. Therefore, it is crucial to evaluate the implicit interest rate for a lease-versus-buy decision.

Since the Lease Payment Is Fixed and Other Costs Associated