Question: Q8. 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

Q8. 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. 3K, +2K, = 30 b. (K, + 1)' + K? =21 Q9. This question follows Q8. Using the transformation curve in part b of Q8, find the firm's optimal financing decision if the firm's initial resources at time 1 is: a. 5 b. 0 c. 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 , , K, ) = K, . K

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