- Thread starter Assem
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Differentiate the first expression w.r.t. L and set equal to 0 (for optimisation). Then solve for L.

I can’t get how e^rT(1-a)/a)-1 came?Could someone explain how first term became the second?View attachment 25266

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Please share your work - what did you get?I can’t get how e^rT(1-a)/a)-1 came?

Also please tell us:

What is L

What is C ?

What is α ?

Note to mathematicians: economists have their own conventions for math. For example, they frequently put the independent variable on the vertical axis. I suspect somewhere there is a definition of some function in this problem. Based on this fragment, we cannot even tell whether we are using univariate or multivariate calculus. The most common tool in many economic theorems are LaGrangians, which definitely means multivariate.

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L* seems to be the value for L which maximises the first expression.

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not sure what you have done here.L is loan, C consumption,

View attachment 25272a - I don’t know maybe discount