Q2) Think of the entrepreneur with no initial resources (but s/he has a good idea=superior project) case covered in Section 3.1.2 and Figure 3.6.

Recall that this person is living in a "perfect capital market" where the prevailing interest rate is 10%.

Also suppose that the entrepreneur's "good idea=superior project" allows her/him to convert an investment worth $1000 at time1 into a payoff of $6000 at time 2

Hint: the material in Section 4.1 is very similar

a) Calculate the entrepreneur's MV1 = her/his time1 wealth

15pts

b) briefly explain how she/he can achieve this wealth

15 pts