Suppose a china plate lasts forever and a paper plate lasts for one year. Suppose that a plate yields a service value of M per year regardless of the type of plate used to eat off of (assume this value is realized at the end of the year).

a. Assuming that the rate of interest is r, what is the formula for the price of the china plate?

b. Again assuming the rate of interest is r, what is the formula for the price of the paper plate?

c. Using the two formulas, what is the formula for the relative price of china plates to paper?

d. If r equals 5%, how many times more expensive are china plates to paper ones?