Mr. Bird has $100 in income this year and zero income next year. The market interest rate
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Mr. Bird has $100 in income this year and zero income next year. The market interest rate is 10% per year. Mr. Bird also has an investment opportunity in which he can invest $50 today and receive $80 next year. Suppose Mr. Bird spends $30 this year and invests in the project. What will be his consumption next year? (We assume that he will consume all his wealth in the next year)
Related Book For
Corporate Finance
ISBN: 978-0071339575
7th Canadian Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Gordon Ro
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