What values of the discount factor

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Reference no: EM131605907

(a) Consider the stream of payoffs V which gives 2 jollies in every period, for infinity periods. The stream W gives 3 jollies in period 1, then 1 for every period T = 2, 3, . . ., for infinity periods. For what values of the discount factor δ is the discounted sum of V greater than that of W?

(b) Suppose V gives 1 jolly in period 1, 2 jollies in period 2, and 1 jolly in each period thereafter, for infinity periods. W gives 2 jollies in period 1, and 1 jolly in every period thereafter, for infinity periods. For what values of δ is the discounted sum of V greater than that of W?

(c) Suppose V gives 1 jolly in periods 1, 2, and 3; then 2 jollies each period forever after. What is the discounted sum of V ?

Reference no: EM131605907

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