QUESTION $5$

Swift Corporation is leasing a machine from Gray, Inc. Swift's incremental borrowing rate is $13\%.$ The prime rate

of interest is currently $7\%.$ Gray's implicit rate in the lease is $9\%$; Swift knows this rate. What interest rate should

the lessee use to discount the lease payments under IFRS?

$7\%$

$9\%$

$0\%$

$13\%$