Haris is pondering whether to invest in a new project which has a positive net return (net present value). He can borrow and lend from a bank at the risk-free rate (for simplicity also assume no risk). He states that he prefers more wealth to less.

a. If Haris declines to invest in the project, even though it has a net positive return, because he claims that the initial outlay of cash would reduce his current level of consumption, is his decision rational?

b. What would you advise Haris to do if he could finance the project and earn its net present value by borrowing from the bank? Could he increase his current level of satisfaction without sacrificing his future level of satisfaction (or consumption)?