Essay
An individual has an income of $4,000 in period 0 and $0 in period 1. The individual has the potential investment opportunities given below:
If the market interest rate is 11%, what is the optimal investment? What is maximum consumption in period 1 if the individual takes on the optimal set of investment projects and consumes all other period 0 income?
D.
Period 1 consumption is $2,400 + $910 = $3,310
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