Suppose that you consider the consumption preferences of an investor with initial endowment

equal to 40,000$. The preferences of this investor are characterized by the following

indifference curve: U = c0 c1 the slope of which is equal to: dc1/dc0 = - c1/c0.

Moreover, the available investment opportunity set is expressed through the following

equation:

c1 = g(c0) = 150 sqrt(40,000 - c0).

The risk free interest rate is equal to 10%.

Which is the optimal financing decision? Explain your answer analytically.