Answer:
The answer is "30 units".
Explanation:
[tex]\to MPk = 1,000 -10K\\\\\to price \ of \ capital(Pk) = 1,000\\\\\to depreciation \ rate = 5\% \ per \ year\\\\\to interest \ rate = 10\% \ per \ year\\[/tex]
Calculating the capital of UC:
[tex]\to (5 \% + 10\%) \times 1,000\\\\\to 15\% \times 1,000\\\\\to 0.15 \times 1,000\\\\\to 150\\\\\to UC=150[/tex]
Desired capital stock:
[tex]MPk = User \ cost\ of\ capital\\\\\to 1000 - 10K* = 150\\\\\to 10K* = 850\\\\\to K* = \frac{850}{10}\\\\\to K* =85 \\\\[/tex]
The capital stock is Kt = 50 units
The gross Investment formula:
[tex]\to It = K* - Kt \\\\[/tex]
[tex]= 85 -50\\\\ = 30 \ units[/tex]
