You Have Just Purchased a New DVD Player to Show

Multiple Choice

You have just purchased a new DVD player to show videos to your customers.The DVD player 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 DVD player.The firm's user cost of capital for the first year is

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