contestada

A firm is considering leasing. The firm can borrow at 9 percent, and the marginal corporate tax rate is 21 percent. What is the discount rate for valuing the lease

Respuesta :

Parrain

Based on the rate at which the firm can borrow and the marginal corporate tax rate, the discount rate for the lease would be 7.11%.

What would be the discount rate?

The discount rate is the after tax borrowing rate.

It can be found as:

= Borrowing rate x ( 1 - tax rate)

Solving gives:

= 9% x ( 1 - 21%)

= 7.11%

In conclusion, the discount rate is 7.11%.

Find out more on after-tax rates at https://brainly.com/question/867229.

Otras preguntas