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Suppose the real interest rates in the market are equal to 1%, the capital depreciation rate is 5% and the average price of capital is

Suppose the real interest rates in the market are equal to 1%, the capital depreciation rate is 5% and the average price of capital is declining at 2%. Assume there is a corporate tax of 30%. The capital user cost then is equal to

a) 11%

b) 4%

c) 6%

d) 8%

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