a)Suppose that new machines cost $100 and the marginal benefit from new machines is 50 - K, where K is the number of machines purchased. Suppose that the depreciation rate is 10% and the dividend cost is 5%. How many machines should the firm purchase?

b)Now suppose we impose a 20% tax on earnings minus labor costs. In addition, the government introduces tax incentives for investment that reduce the effective depreciation rate to 3%. The dividend cost remains 5%. Now how many machines should the firm purchase?