The user cost of capital is given by the following formula,where PK is the real price of capital goods,d is the depreciation rate,and r is the expected real interest rate.
A)uc = (r + d)/PK
B)uc = PK/(r + d)
C)uc = dPK/r
D)uc = (r + d)PK

Question

Quizplus · Accepted Answer

The user cost of capital is calculated as the sum of the real interest rate and the depreciation rate, multiplied by the real price of capital goods, which is represented by the formula uc = (r + d)PK.

The User Cost of Capital Is Given by the Following