Hi everyone, I was hoping someone could help with the question attached.

I'm having an issue creating an equation independent of t-1, my answer is completely different to the one in the back of the book.

the formula pt is of the form yt=ayt-1 + b

so the time independent term b/(1-a) is k(3-2pt-1)/1-(1+r)

I then put this value into the formula for the solution of a first order linear recurrence equation.

But the answer in the book is something totally different.

Please help!