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:
Suppose that the market interest rate falls to 5%. What is the maximum possible consumption in period 1 if the individual takes on the optimal set of investment projects?
D.
Period 1 consumption is $1,620 + $2,400 + $910 = $4,930
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