What is the most she can consume in her old age

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Problem: Lara Beal has $8,000 in cash now. She can lend and borrow at the bank at 10 percent per period. Her only investment possibility other than the bank is a project that costs $4,500 now in her Youth and has a payoff of $5,000 in cash one period from now in her Old Age.

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Question 1: What is the most she can consume in her Old Age?

Question 2: What is the most she can consume now?

Reference no: EM132421945

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