Question: thanks for helping Date: Consider a two-period consumption model consisting of now,t: and next year, t= 1 . There are two investors,Investor A who is

thanks for helping

Date: Consider a two-period consumption model consisting of now,t: and next year, t= 1 . There are two investors,Investor A who is patient and wants to wait and consume the maximum possible at t= 1 . Investor B who is impatient and wants to consume the maximum amount possible now. Both investors have an income of $200000 today and no income at t= 1. Both investors have access to a real investment opportunity costing $200 000 now and returning a guaranteed $215000 at t= 1 . They also have access to risk-free borrowing and lending at an annual rate of 10 % . Explain the investment decisions taken by each investor ( both real and financial ) and the resultant cash flows and consumption, Including a brief discussion of the optimally of the net present value ( NPV ) rule

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