If the Real Interest Rate Is 4 Percent, the Marginal

question 76

Multiple Choice

If the real interest rate is 4 percent, the marginal product of capital is 2 percent, the depreciation rate is 10 percent, the tax rate is 25 percent, and capital gain is 1 percent, what is the user cost of capital?

• A) 40.9 percent
• B) 7.5 percent
• C) 12.5 percent
• D) 10.5 percent
• E) 17.3 percent

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