Available to support consumption in periods

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Casper Milktoast has $200,000 available to support consumption in periods 0 (now) and 1 (next year). He wants to comsume exactly the same amount in each period. The interest rate is 8%. There is no risk. Suppose Casper is fiven an opportunity to invest up to $200,000 at 10% risk-free. The interst rate stays at 8%. What should he do, and how much can he consume in each period if he is not allowed to borrow against future income?

Reference no: EM131182996

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Available to support consumption in periods : Casper Milktoast has $200,000 available to support consumption in periods 0 (now) and 1 (next year). He wants to comsume exactly the same amount in each period. The interest rate is 8%. There is no risk. Suppose Casper is fiven an opportunity to inve..

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