=+3.9**†

Business Application: Present Value of Winning Lottery Tickets: The introduction to intertemporal budgeting in this chapter can be applied to thinking about the pricing of basic financial assets. The assets we will consider will differ in terms of when they pay income to the owner of the asset. In order to know how much such assets are worth, we have to determine their present value, which is equal to how much current consumption such an asset would allow us to undertake.