Question

A corporate donor promises to contribute $1 million to an NFP organization, payable in installments over the next 10 years.

If the NFP records the promise at its present value, what is the most appropriate discount rate?

	A.	Rate at which the NFP can obtain loans
	B.	Treasury bond rate
	C.	Current borrowing rate for low-risk individuals
	D.	Market rate on the NFP's investments

Answer 1

Ans

Rate at which the NFP can obtain loans

Reason:-

As per GAAP, the discount rate should be that which gives proper market valuations.

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