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Good afternoon Sir
For exercises where a decision to Lease or Buy is required, I don’t have clear which discounting rate I should use. We say we use the after-tax cost of borrowing
But if the exercise doesn’t give it, but says only 8% loan notes and also give us the wacc
what should we choose and why?Thank you
If it is choosing between leasing or buying then we discount at the after tax cost of borrowing and this will be given in the exam.
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