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Unformatted text preview: of consumption over time to fit their particular preferences. This allows corporations to accept all positive NPV projects, regardless of the intertemporal consumption preferences of the shareholders. Chapter 4, Appendix Question 4 Input area: Current income and consumption $40 Period 1 income and consumption $50 Maximum current consumption $86 New maximum current consumption $98 Output area: a. Market interest rate 8.70% b. NPV of investment $12.00 c. Equal consumption amount $51.04 Chapter 4, Appendix Question 5 Input area: Current wealth $60,000 Maximum current consumption $80,000 Maximum consumption next year $90,000 Desired current consumption $20,000 Desired consumption next year $67,500 Output area: a. Market interest rate 12.50% b. NPV of investment $(60,000.00) c. Equal consumption amount $10,588.24...
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 Fall '08
 Stanley,T
 Finance

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