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Suppose that Jane can borrow and lend without restrictions at a rate of 10% per year. While she has no cash in hand (no endowed

image text in transcribed Suppose that Jane can borrow and lend without restrictions at a rate of 10% per year. While she has no cash in hand (no endowed wealth at all), Jane has come across an investment opportunity. If she decides to take this opportunity, she must invest $20,000 today. The investment will return $24,200 in two years from now. Assume that a discount rate of 10% applies to all cash flows. Answer questions a ) and b) below. a) [10 marks] Jane has decided to take the investment opportunity. Determine the amount of wealth that Jane would have in two years from now. For full credit, you must show the steps/calculation toward your results. b) [10 marks] Suppose that the investment return can be realized one year earlier; that is, $24,200 will be returned to Jane in one year from today. She still can borrow and lend at a rate of 10%. Determine the amount of wealth that would be available to Jane today. ^For full credit, you must show the steps/calculation toward your results

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