Question: 9. Consider the example in Section 3.3 but now assume that the market rate of interest is 10%. Graphically show the operating plan for the

 9. Consider the example in Section 3.3 but now assume that

9. Consider the example in Section 3.3 but now assume that the market rate of interest is 10%. Graphically show the operating plan for the following two transformation curves: a. 3K1 + 2K2 = 30 b. (K,+1)? + K3 = 21 Using the transformation curve in part b, find the firm's optimal financing decision if the firm's initial resources at time I is: c. 5 d. 0 e. Find the optimal consumption decision assuming the transformation curve in part b and further assuming that the only owner of the firm has the following utility function: u(K,, K2) - K,K)A 9. Consider the example in Section 3.3 but now assume that the market rate of interest is 10%. Graphically show the operating plan for the following two transformation curves: a. 3K1 + 2K2 = 30 b. (K,+1)? + K3 = 21 Using the transformation curve in part b, find the firm's optimal financing decision if the firm's initial resources at time I is: c. 5 d. 0 e. Find the optimal consumption decision assuming the transformation curve in part b and further assuming that the only owner of the firm has the following utility function: u(K,, K2) - K,K)A

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