Calculate the User Cost of Capital of a Machine That

question 57

Multiple Choice

Calculate the user cost of capital of a machine that costs $5000 and depreciates at a rate of 25%,when the expected real interest rate is 5%.

• A)$150
• B)$500
• C)$1500
• D)$5000

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Definitions:

Operations

Activities involved in the day-to-day running of a business for the purpose of producing value for the stakeholders; involves management of resources, production, and distribution of goods and services.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments, not directly related to a company's main operations.

Financing Activities

Transactions related to raising capital or repaying investors, including issuing equity, borrowing funds, and repaying debt.

Operations

Activities involved in the day-to-day running of a business for the purpose of producing value for the stakeholders.