We showed that risk-free cash flows should be discounted at the aftertax risk-free rate. Because both lease
Question:
We showed that risk-free cash flows should be discounted at the aftertax risk-free rate. Because both lease payments and depreciation tax shields are nearly riskless, all relevant cash flows in the lease–buy decision should be discounted at a rate near this aftertax rate. We use the real-world convention of discounting at the aftertax interest rate on the lessee’s secured debt. LO.1
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Question Posted: