In computing the present value of the payments under the present value test, the lessee must use a discount rate. Normally, use of the lessees incremental borrowing rate is appropriate unless:

a. the lessees incremental borrowing rate exceeds the prime interest rate on the date of the lease agreement, in which case the prime interest rate should be used.

b. the incremental borrowing rate is less than two-thirds of the prime interest rate, in which case the prime interest rate should be used.

c. the lessees incremental borrowing rate is double the LIBOR rate.

d. the lessee knows the implicit rate of the lessor.