Question: Currently, Jack Morris makes $85,000 per annum. Next year his income will be $108,000. Jack is a big spender and he wants to consume $135,000

Currently, Jack Morris makes $85,000 per annum. Next year his income will be $108,000. Jack is a big spender and he wants to consume $135,000 a year. The equilibrium interest rate is 7 percent. What will be Jack’s consumption potential next year if he consumes $135,000 this year?

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