I'm starting the reading of Principles of Corporate Finance, 12th Edition, from Brealey & Myers.

I'm in Intro chapter 1, and looking for some help to anwer the questions 1 and 2 from the chapter Appendix.

must be taken into account in financial decision making. However, we also discuss research indi- cating that, in general, financial markets function fairly well. In this case maximizing shareholder value is a sensible corporate objective. But for now, having glimpsed the problems of imperfect markets, we shall, like an economist in a shipwreck, simply assume our life jacket and swim safely to shore. QUESTIONS 1. Maximizing shareholder value Look back to the numerical example graphed in Figure 1A.1. Suppose the interest rate is 20%. What would the ant (A) and grasshopper (G) do if they both start with $100,000? Would they invest in their friend's business? Would they borrow or lend? How much and when would each consume? 2. Maximizing shareholder value Answer this question by drawing graphs like Figure 1A.1. Casper Milktoast has $200,000 on hand to support consumption in periods 0 (now) and 1 (next year). He wants to consume exactly the same amount in each period. The interest rate is 8%. There is no risk. a. How much should he invest, and how much can he consume in each period? b. Suppose Casper is given an opportunity to invest up to $200,000 at 10% risk-free. The inter- est rate stays at 8%. What should he do, and how much can he consume in each period? must be taken into account in financial decision making. However, we also discuss research indi- cating that, in general, financial markets function fairly well. In this case maximizing shareholder value is a sensible corporate objective. But for now, having glimpsed the problems of imperfect markets, we shall, like an economist in a shipwreck, simply assume our life jacket and swim safely to shore. QUESTIONS 1. Maximizing shareholder value Look back to the numerical example graphed in Figure 1A.1. Suppose the interest rate is 20%. What would the ant (A) and grasshopper (G) do if they both start with $100,000? Would they invest in their friend's business? Would they borrow or lend? How much and when would each consume? 2. Maximizing shareholder value Answer this question by drawing graphs like Figure 1A.1. Casper Milktoast has $200,000 on hand to support consumption in periods 0 (now) and 1 (next year). He wants to consume exactly the same amount in each period. The interest rate is 8%. There is no risk. a. How much should he invest, and how much can he consume in each period? b. Suppose Casper is given an opportunity to invest up to $200,000 at 10% risk-free. The inter- est rate stays at 8%. What should he do, and how much can he consume in each period