Consider the basic formula for the user cost of capital in the presence of a corporate income tax. Suppose the baseline case features an interest rate of 2 percent, a rate of depreciation of 6 percent, a price of capital that rises at 1 percent per year, and a 0 percent corporate tax rate. Starting from this baseline case, what is the user cost of capital after the following changes?
(a) No changes—the baseline case.
(b) The corporate tax rate rises to 35 percent.
(c) The interest rate doubles to 4 percent.
(d) Both (b) and (c).