Question 1- Interest rates Suppose you borrow f100 for a year at an annual interest rate of 9 percent . At the end of the process , how much interest will you owe the lender ? I will owe the lender E_ Question 2- Simple time discounting problem (Angner 2012 , p. 151 ) Exponential discounting (the delta model ): The utility U.(u) of utility stream u = {uj, uzun} from the point of view of t = 0 is Uo(u) = up + 6u, + 62 u2 + 63u;+ ...+ 6nu. 2.1 . Suppose that 6 = 0.9 and that each utility stream is evaluated from t = 0, compute the utility of four utility stream (a, b, c, and d) in the table below . if given the choice between the four alternatives , which would you choose ? If you had the choice between a, b, and c, which would you choose ? Time Time Time Option summary U'u) U'(u) t=0 t=1 t=2 when 6 = 0.9 when 6 =0.1 a 1 utile now (to ) 3 3 utiles tomorrow (t1 ) 4 4 utiles the day after tomorrow (t2 3 4 The sum of a, b and c An empty cell means that the utility received at that time is zero 2.2 . Suppose now that 6 = 0.1 and that each utility stream is evaluated from t = 0, evaluate the utility of each option (a, b, c, and d) in the table above . If given the choice between the four alternatives , which would you choose ? If you had the choice between a, b, and c, which would you choose ? Question 3- Simple time discounting problem (Angner 2012 , p. 153 ) Suppose that Alexandra , at time zero , is indifferent between utility streams a (2 utiles at t = 0) and b (6 utiles at t = 1). What is her discount factor 6