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For questions 4-? consider the following situation: U'I An individual's real before-tax labour income in year I is 40,001). She has no non- human capital at date I. Her income is received at the end of each year so that the A, (1 Hr)"+l ' of interest, which is 5% {0.05) per annum. There is also an income tax rate of 25% {(1.25}. She has an innite planning horizon and consumes what she believes to he her permanent income in each period. Consumption expenditure takes place at the end of each period. present value of gross income in year r +i is where r is the constant real rate . Calculate the person's wealth in net present value terms. (in marks} . Suppose in year 10, the government cuts income taxes to 20% (0.2]. Calculate the person's wealth in net present value terms. [l marks} Calculate the person's full consumption prole under the assumption that i. the tax change is a complete surprise. ii. the tax change was pre-announced at the start of the planning horizon. . Under scenario (i) that the tax change is a complete surprise enter in the level of consumption in the 1'It period. {5 marks) . Under scenario {ii} that the tax change was preannounced enter in the level of consumption in the 1\" period. {5 marks)