Question 3 Jack and Sally are saving for next years Halloween party (they rightfully cancelled this years party). They each have different value of time (monthly interest rates: ijack and isally). There are two saving plans:

1] Put aside $200 now

2] Save $300 after six months.

They both looked at those plans and disagreed on the outcome. Jack prefers plan 1 while Sally prefers plan 2. They went to a common friend to arbitrate who, in turn looked at plans 1 and 2 and said they are equivalent. That is, it does not matter which plan to be selected. The friend has his own value of time: ifriend.

a] What is the value of time of the friend (monthly interest rate of the friend)?

b] Describe who has a higher value of time: Jack or Sally?

c] Who has higher value of time: Jack or the friend? You need to provide clear analysis to these problems not just final answers.