alleryStart learning →The lessee's incremental borrowing rate is the rate to borrow, over a similar term, funds needed to
APurchase the asset
BSettle a residual guarantee
CRefinance the lessor
DRepay existing debt
Answer & Solution
Correct answer: A. Purchase the asset
It is the rate the lessee would pay to borrow the funds necessary to buy the asset over a similar term and with similar security.
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