Clare is contemplating her possible consumption patter for this year and next. She know that she will have income of $50,000 this year and $55,000 next yea. Her plan is to consume $40,000 this year (t=0). She is also going to invest 30,000. This investment has a positive NPV of $450. She decides to take the investment; in addition, the return on the investment is 9.62%. What consumption she can expect at t=1? (show a detailed procedure)

Clare is contemplating her possible consumption patter for this year and next. She know that she will have income of $50,000 this year and $55,000 next yea. Her plan is to consume $40,000 this year (t=0). She is also going to invest 30,000. This investment has a positive NPV of $450. She decides to take the investment; in addition, the return on the investment is 9.62%. What consumption she can expect at t=1? (show a detailed procedure)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.3P

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