What will be his consumption next year

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Reference no: EM131604313

Mr. Bird has $100 income this year and zero income next year. The market interest rate is 10 percent per year. Mr. Bird also has an investment opportunity in which he can invest $50 today and receive $80 next year. Suppose Mr. Bird consumes $30 this year and invests in the project. What will be his consumption next year? (We assume that he will consume all of his wealth in the next year.)

Reference no: EM131604313

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