Suppose you have the option of spending $[x] now or saving it until next year. If you save it, the bank will pay you an interest rate of 9.8%. Your utility function is u(w) = w. What does your discount factor & need to be for you to be indifferent between spending the money now and saving it? Round your answer to 3 decimal places (so an answer might be, for example, 0.476).

Suppose you have the option of spending $[x] now or saving it until next year. If you save it, the bank will pay you an interest rate of 9.8%. Your utility function is u(w) = w. What does your discount factor & need to be for you to be indifferent between spending the money now and saving it? Round your answer to 3 decimal places (so an answer might be, for example, 0.476).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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