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

Question

Quizplus · Accepted Answer

The user cost of capital is the real interest rate multiplied by the purchase price of the machine minus its resale value. In this case, the user cost of capital is 10% * $15,000 - $12,000 = $4,500.

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