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A corporation is choosing how much capital to utilize. Suppose the depreciation allowance has present value z=.6. The depreciation rate is =.10. The corporate tax

A corporation is choosing how much capital to utilize. Suppose the depreciation allowance has present value z=.6. The depreciation rate is =.10. The corporate tax rate is =.35. The financing cost of capital is =.15. The marginal revenue product of capital for the firm is 1000/K. Each unit of capital is worth $1. a) What is the optimal choice of K?

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