1) Assume a two-period certainty model where the market rate of interest is 11%. You have sold your rights to royalties from the sale of your new book to the publisher, Allen and Unwin. The publisher will give you an advance payment of $60,000 today, and in one years time, the publisher will pay you $110,000, whether the book sells or not. a. If the finds from the publishers are the only income you have and you want to consume $75,000 now, can you consume $90,000 next year? b. If, instead of (a), you decide that in one years time, you will spend $125,000 to pay off your mortgage, explain with calculations how much you can afford to consume today. 3 Marks