Reference no: EM131483108

 to use in calculating the present value of the incremental after-tax cash flows associated with a lease financing? Why is the expected residual value of the asset discounted at a higher rate?

Multiple choices are:

the risk of the cash flows connected to the asset is usually different from the risk of the debt payments

the appropriate discount rate is the lessee's after-tax cost of similarly secured debt because the risk of the lease payments is the same as the risk of similarly secured debt

the appropriate discount rate is typically a weighted average of the firm's secured and unsecured debt

the expected residual value of the asset is typically discounted at a higher rate to reflect its typically greater riskiness because residual value is related to project risk, not financing risk.

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