Let f (t) denote the amount of capital invested by a certain business firm at time t.

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Let f (t) denote the amount of capital invested by a certain business firm at time t. The rate of change of invested capital, f′(t), is sometimes called the rate of net investment. The management of the firm decides that the optimum level of investment should be C dollars and that, at any time, the rate of net investment should be proportional to the difference between C and the total capital invested. Construct a differential equation that describes this situation.

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Calculus And Its Applications

ISBN: 9780134437774

14th Edition

Authors: Larry Goldstein, David Lay, David Schneider, Nakhle Asmar

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