Consumption Assignment
February 18th, 2020
Lara Beal has $8,000 in cash now. She can lend and borrow at the bank at 10 percent per period. Her only investment possibility other than the bank is a project that costs $4,500 now in her Youth and has a payoff of $5,000 in cash one period from now in her Old Age.
1) What is the most she can consume in her Old Age?
2) What is the most she can consume now?
3) What is the most she can consume in her Old Age if there is no bank in the economy (i.e. she cannot lend or borrow)? Get Finance homework help today