You own a golf course in Florida and you need to determine how many golf carts you need to buy to maximize profits. Please answer the following questions given the information below. A brand new golf cart costs 2000 rounds of golf and the rate of depreciation is 5%.
The real interest rate is 8%
The expected marginal product of capital is given by MPKf = 1000 – 10K.
a) What is the user cost of capital and what is it expressed in?
b) How many golf carts should you buy to maximize profits (i. e., what is K*)?​
c) Draw a graph (the uc / MPK graph) depicting the state of affairs and label this initial profit maximizing point as point A.​
Now suppose the (local) government with all their financial shortfalls embarks on a campaign to raise revenue to fund the fire department by imposing a so-called "luxury tax" (we know it as τ) equal to 15% of gross revenue. What happens to the profit maximizing number of golf carts? Please show all work and round to two decimal places.

a) 260 rounds of golf

b) 74

c) attached below

d) 70 golf carts

Explanation:

a) Calculate the user cost of capital and what is it expressed in

user cost of capital = total depreciation + total interest

= ( rate of depreciation * Golf cart cost ) + ( real interest rate * Golf cart cost )

= ( d + r ) Golf cart cost

= ( 0.05 + 0.08 ) 2000 = 260 rounds of golf

b) determine the number of carts that should be bought to maximize profits

Profits are maximized when User Cost of capital = MPKF

(d +r) Golf cart cost = MP Kf = 1000 – 10K

( 0.05 + 0.08 ) 2000 = 1000 – 10K

260 = 1000 – 10K     ∴ K = ( 1000 - 260 ) / 10 = 74

c) attached below is the required graph

d) Determine what happens to the profit maximizing number of golf carts

User cost of capital ( 1 - t ) = MPK^f

∴ User cost of capital ( 1 - t ) = 1000 – 10K

260 ( 1 - 0.15 ) = 1000 – 10K

305.88 = 1000 – 10K

K=69.41

that is approximately 70 golf carts is been bought to maximize profit

its ii) i did this test

explanation:

y=mx+b is the right slope of velocity carry the 4 over