Consumption Choices Harry Hernandez has $60,000 this year. He faces the investment opportunities represented by point B in the following fi gure. He wants to consume $20,000 this year and $67,500 next year. This pattern of consumption is represented by point F.

a. What is the market interest rate?

b. How much must Harry invest in fi nancial assets and productive assets today if he follows an optimal strategy?

c. What is the NPV of his investment in nonfi nancial assets?

Consumption next year $90,000 $20,000 Consumption this year $60,000 $80,000 F D B $67,500 $56,250 A C $30,000 LO.1