The user cost of capital consists of:
A)corporate taxes and depreciation.
B)forgone interest and depreciation.
C)the sum of all interest paid on business loans.
D)domestic investment and foreign investment.

Question

Quizplus · Accepted Answer

User cost of capital is the cost of using a capital asset that includes both the forgone interest (return on investment that could have been earned by investing in some other assets) and depreciation (loss in the value of the asset due to wear and tear over time). Corporate taxes and interest paid on business loans may be considered as a part of the overall cost of capital, but they do not specifically relate to the user cost of capital. Domestic and foreign investments are not relevant to the concept of user cost of capital.

The User Cost of Capital Consists Of