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(calculating a lease discount rate) US aluminum overcollateralizes it secured debt by 25%. So the asset value is 125% of the secured debt and the
(calculating a lease discount rate) US aluminum overcollateralizes it secured debt by 25%. So the asset value is 125% of the secured debt and the secured debt is 100/125 = 4/5 = 80% of asset value. If US aluminum's secured borrowing rate is 9% and its unsecured borrowing rate is 11%, what discount rate should be used to compute the net advantage to leasing.
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