You Have Just Purchased a New VCR to Show Videos

Multiple Choice

You have just purchased a new VCR to show videos to your customers.The VCR cost $500,and you depreciate the machine at a rate of 25% each year.You can borrow money from the bank at 10%,or receive 6% for depositing money at the bank.The expected inflation rate in the coming year is 5%.You used the company's own funds to purchase the VCR.The firm's user cost of capital for the first year is

A) $130.
B) $150.
C) $155.
D) $175.