A Machine Cost $15,000 to Install,and Has a Resale Value

question 35

Multiple Choice

A machine cost $15,000 to install,and has a resale value one year later of $12,000.If the real interest rate is 10%,then the user cost of capital is ________.

• A)$4,500
• B)$1,500
• C)$3,000
• D)$1,200

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Definitions:

Security Interest

A legal claim on assets which are given to secure a loan and ensure the repayment of debt.

Debtor

A debtor is an individual or entity that owes a debt to another party, usually a sum of money.

Attaches

The process or moment when a legal right, interest, or lien is officially joined or connected to property or assets.

Secured Interest

A legal claim or lien on assets which is established to secure payment or performance of an obligation.