The User Cost of Capital Is

question 61

Multiple Choice

The user cost of capital is:

• A) the cost of using one more unit of capital.
• B) zero, if taxes are zero.
• C) equal to the real interest rate.
• D) equal to negative capital gain.
• E) higher as corporate taxes fall.

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Definitions:

Corporate Powers

Legal authorities and capacities granted to a corporation by law, including entering into contracts, owning assets, and issuing stock.

Businessperson

An individual actively involved in the business world, especially in activities related to operating, managing, or investing in businesses.

Contract

A legally enforceable agreement between two or more parties that creates mutual obligations.

Investor

An individual or entity that allocates capital with the expectation of achieving a financial return, often by purchasing securities, real property, or other investment vehicles.