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Consider a world with two points in time, t0 and t1. Thomas Adamova inherits S1.25 million at t0. He has two projects he can invest
Consider a world with two points in time, t0 and t1. Thomas Adamova inherits S1.25 million at t0. He has two projects he can invest this inheritance in at t0. Project A costs $225,000 at t0 and yields $287,500 at t1. Project B costs $475,000 at t0 and yields $530.000 at t1. He can also lend and borrow at a bank at an interest rate of 15 percent. Thomas is only interested in consumption at t1; he does not get any utility from consumption at t0. What is the most Thomas can consume at t1
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