Figure 17.4: Capital Arbitrage 
-Consider Figure 17.4. Write down the equation for the user cost of capital. Discuss what happens to the user cost in the following scenarios:
(a) the corporate income tax rises;
(b) the real interest rises; and
(c) there is an increase in capital gains.
Graphically show what happens to capital investment.
Correct Answer:
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.(a)
: Raises the us...View Answer
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