Calculate the User Cost of Capital of a Machine That

question 22

Multiple Choice

Calculate the user cost of capital of a machine that costs $5000 and depreciates at a rate of 25%,when the nominal interest rate is 10% and the expected inflation rate is 5%.

• A)$150
• B)$500
• C)$1500
• D)$5000

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Definitions:

Incorporate

The process of legally forming a corporation, which is a type of business entity recognized as separate from its owners.

Articles Of Incorporation

The document that is filed with the appropriate state official, usually the secretary of state, when a business is incorporated and that contains basic information about the corporation.

Registered Office

The official address of a company or organization, registered with the appropriate legal authorities, where official documents are sent.

Good Faith

A principle that emphasizes honesty, fairness, and sincerity in the execution of obligations or dealings.