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....
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 Spring '08
 RAYMONDKAN
 Economics, Net Present Value, optimal consumption plan

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