Lara Beal allocates wealth between youth and old age. Currently she has $8000 in cash(in youth). She can lend and borrow at the bank at 15%(i.e lending $1 in youth will give her $1.15 in old age). Her only investment opportunity other than the bank is a project that costs $5000 in her youth and has a payoff of $6000 in her old age. What is the most she can consume in her old age?
2 answers
1450
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1 answer