Can you please help me solve this ?

Consider a two-period economy: A rm produces output (Y) with capital (K) according to the following production function Y; = 223K135 in which 23 is an index of total factor productivity in period t. A portion 6 of the capital stock used in the production func- tion needs to be repaired each period and new capital installed in any period t becomes productive a period later only. Prots in period 0 and in period 1 are respectively given by are = Y]; + (1 6)K0 K1 and by 7T1 = Yl + (1 6)K1. The goal of this rm is to maximize the present value of prots 7T0 + (1 / (1 + r))7T1 by choosing K1, given K0, 7', 2:0, and 21. Suppose that K0 = 16, that 20 = 21 = 1, that 6 = 0.10, and that 7' = 0.10. a) Explain what the marginal product of capital measures. Explain what the user cost of capital is. Why is it optimal for the rm to choose K1 so that the marginal product of capital in period 1 is equal to the user cost of capital? b) Find the optimal value of K1. How much does this rm need to invest in period 0 to achieve this value of K1? Calculate 7m. What do you conclude? c) Suppose that 2:1 is expected to fall. How will investment be affected in period 0? Explain