Question

A new assembly line robot with a price tag of $2.5 million is expected to depreciate by 3% at the end of next year. The real interest rate is 2.5%. The user cost of of the robot for one year is $137,500. What is the user cost of the robot for one year?

Answer 1

Answer:

$137,500

Explanation:

Calculation for the user cost of the robot for one year

User cost=(3%*$2,500,000)+(2.5%*$2,500,000)

User cost=$75,000+$62,500

User cost=$137,500

Therefore The user cost of of the robot for one year is $137,500