What is the real user cost of the building

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Reference no: EM131065136

A firm just purchased a building that cost $5 million. The nominal mortgage interest rate is 5% per annum, mortgage interest payments are tax deductible, and the firm is in a 20% tax bracket. The expected inflation rate is 3%. Maintenance expenses are 5% of the initial value of the building. What is the real user cost of the building?

Reference no: EM131065136

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