Assume that Yoko is considering investing in new computers for his company. The Japanese real interest rate is 4%, and computers are valued ¥100,000. The price of computers is not expected to change next year.

a) Calculate the user cost of capital for computers, assuming that computers depreciate at a 20% annual rate.

b) Suppose that due to some unforeseen technological advancement, computers will have to be replaced after three years, i.e. the depreciation rate is now 33%.

Calculate the new user cost of capital for computers.