You Have Just Purchased a New DVD Player to Show

question 36

Multiple Choice

You have just purchased a new DVD player to show videos to your customers.The DVD player cost $500,and you depreciate the machine at a rate of 25% each year.You can borrow money from the bank at 10%,or receive 6% for depositing money at the bank.The expected inflation rate in the coming year is 5%.You used the company's own funds to purchase the DVD player.The firm's user cost of capital for the first year is

• A)$130
• B)$150
• C)$155
• D)$175

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Definitions:

Seaweed

Marine algae found in oceans around the world, used for food, as fertilizer, and in some cultures, for medicinal purposes.

Gelatin-like Substance

A viscous, semi-solid material, similar in texture to gelatin, used in various applications.

Culture Plate

A flat dish made of glass or plastic that is used in laboratories to grow microorganisms under controlled conditions.

Pathogen

An organism that causes disease in other organisms, particularly in humans, animals, and plants.