The rental cost/ user cost of capital will decrease when:
A) the expected profit from the machine decreases.
B) the real interest rate increases.
C) the expected level of sales decreases.
D) the rate of depreciation decreases.
E) the expected profit from the machine increases.

Question

Quizplus · Accepted Answer

A decrease in the rate of depreciation reduces the cost of using the capital over time, thereby decreasing the rental cost/user cost of capital.

The Rental Cost/ User Cost of Capital Will Decrease When