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4. Lara allocates wealth between two periods: youth and old age. Currently (in her youth) she has $8,000 in cash. She can lend and borrow
4. Lara allocates wealth between two periods: youth and old age. Currently (in her youth) she has $8,000 in cash. She can lend and borrow at the bank at 15% (that is, lending S1 in youth will give her $1.15 in old age). Her only investment opportunity other than the bank is a project that costs S5,000 now in her youth and has a payoff of S6,000 in her old age. What is the most she can consume in her old age? (She must consume at least 0 in each period.)
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