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What is the optimal amount of investment

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Reference no: EM133116004

In the two-period model of investment the production function is given by Q=9K(2/3) . The initial capital stock is K1=110. The interest rate is 20%.

a) What is the optimal amount of investment if capital depreciates 100 percent per year?

b) How would your answer to a) change if capital depreciated by 10 percent per year?

Reference no: EM133116004

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