This preview shows page 1. Sign up to view the full content.
Unformatted text preview: ( C & ; C & 1 ) and associated utility? 4. The same investment opportunity as in part 2 exists, and borrowing and lending as in part 3 are available. What is the optimal investment I & ? What is your optimal consumption plan ( C & ; C & 1 ) and associated utility? What is the NPV of the investment? What is the average return on your investment? 5. The same investment opportunity as in part 2 exists, and borrowing and lending as in part 3 are available. Your utility function changes all of a sudden. It is now U ( C ; C 1 ) = ( C ) 1 = 3 & ( C 1 ) 2 = 3 + ( C ) 2 = 3 & ( C 1 ) 1 = 3 + p C + p C 1 : What is the optimal investment I & ? What is the NPV of the investment? Think before doing any calculations....
View Full
Document
 Spring '08
 RAYMONDKAN

Click to edit the document details