3. Consider an individual who has the possibility of investing an amount t in period 1 in a fund that gives an amount s in period 2. (a) If the interest rate r is positive, what would be the smallest s so that it is optimal for the consumer to accept that investment? (b) If t = 100 and s 115, what is the highest interest rate at which the individual is willing to invest in that fund?
3. Consider an individual who has the possibility of investing an amount t in period 1 in a fund that gives an amount s in period 2. (a) If the interest rate r is positive, what would be the smallest s so that it is optimal for the consumer to accept that investment? (b) If t = 100 and s 115, what is the highest interest rate at which the individual is willing to invest in that fund?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 16MC: When using the NPV method for a particular investment decision, if the present value of all cash...
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![3. Consider an individual who has the possibility of investing an amount t in period 1 in a
fund that gives an amount s in period 2.
(a) If the interest rate r is positive, what would be the smallest s so that it is optimal for
the consumer to accept that investment?
(b) If t = 100 and s =
115, what is the highest interest rate at which the individual is
willing to invest in that fund?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F328ed224-e682-45ed-8d15-6aba9929b65f%2F104cb90f-4dee-4274-ab6a-f51c82c7b128%2F1re525r_processed.jpeg&w=3840&q=75)
Transcribed Image Text:3. Consider an individual who has the possibility of investing an amount t in period 1 in a
fund that gives an amount s in period 2.
(a) If the interest rate r is positive, what would be the smallest s so that it is optimal for
the consumer to accept that investment?
(b) If t = 100 and s =
115, what is the highest interest rate at which the individual is
willing to invest in that fund?
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