Assume that the user cost of capital (C)is simply
where r is the after tax rate of return,δ is the depreciation rate,Θ is the corporate tax rate and,r is the individual tax rate.Now assume further that the after?tax rate of return is 10 percent and the economic depreciation rate is 2 percent.The firm faces corporate taxes of 35 percent with an individual tax rate of 25 percent.What is the user cost of capital in this case?

Question

Assume that the user cost of capital (C)is simply  
where r is the after tax rate of return,δ is the depreciation rate,Θ is the corporate tax rate and,r is the individual tax rate.Now assume further that the after?tax rate of return is 10 percent and the economic depreciation rate is 2 percent.The firm faces corporate taxes of 35 percent with an individual tax rate of 25 percent.What is the user cost of capital in this case?

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The Answer of Assume that the user cost of capital (C)is simply  
where r is the after tax rate of return,δ is the depreciation rate,Θ is the corporate tax rate and,r is the individual tax rate.Now assume further that the after?tax rate of return is 10 percent and the economic depreciation rate is 2 percent.The firm faces corporate taxes of 35 percent with an individual tax rate of 25 percent.What is the user cost of capital in this case?

Assume That the User Cost of Capital (C)is Simply