Leasing enables a firm to acquire the use of an asset just as a cash purchase would. So should the asset acquisition/lease decision be evaluated by using the lessee's required return for the asset as the discount rate? but lease financing displaces conventional debt financing. So should the asset acquisition/lease decision be evaluated by using the lessee's cost of secured debt as the discount rate? How would you resolve these apparently contradictory arguments?

Multiple choices:

the NAL calculation uses two different rates for exactly this reason

the issue confuses two different decisions: the acquisition decision and the financing decision

the acquisition decision is based on the NPV of the asset, which is based on the assets required return (cost of capital)

the financing decision is whether to lease or buy (given the decision to acquire use of the asset), which is based on the required return for similarly secured debt

A and B

A and C

A and D

B and C

B and D

C and D

all but A

all but B

all but C

all but D

all are true