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Target uses a 6% discount rate, which is quite a bit higher than the rates paid...

Target uses a 6% discount rate, which is quite a bit higher than the rates paid on mortgages, for example, or the interest rate you'd receive from a bank. The present value of the lease liability is very sensitive to the interest rate used in the calculation, so managers have a chance to bias the numbers when they choose the discount rate. What do you think that Target's discount rate is based on? If a dishonest manager wanted to bias the numbers, which way would the manager push the discount rate, up or down?

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