You have an income of $4,000 in Period 0 and $0 in Period 1. Four different investment opportunities have been given to you, which is summarized in the table below: Worth in Period 1 $1,620 $2,400 Project Cost $1,500 $2,000 $1,000 $1,040 D $700 $910 If the market interest rate is 11%, what is the optimal investment you can make? What would your consumption be in Period 0 and Period 1 if you take on the optimal set of investments? AB

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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You have an income of $4,000 in Period 0 and $0 in Period 1. Four different investment
opportunities have been given to you, which is summarized in the table below:
Project
Cost
Worth in Period 1
$1,620
$2,400
$1,040
$1,500
$2,000
$1,000
D
$700
$910
If the market interest rate is 11%, what is the optimal investment you can make? What would
your consumption be in Period 0 and Period 1 if you take on the optimal set of investments?
Transcribed Image Text:You have an income of $4,000 in Period 0 and $0 in Period 1. Four different investment opportunities have been given to you, which is summarized in the table below: Project Cost Worth in Period 1 $1,620 $2,400 $1,040 $1,500 $2,000 $1,000 D $700 $910 If the market interest rate is 11%, what is the optimal investment you can make? What would your consumption be in Period 0 and Period 1 if you take on the optimal set of investments?
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