Homework Answers
Answer:
Solve the optimal value of consumption per year-
Since the interest rate is 0, Present value = Future Value
Total earning for 60 years - 100*60 = 6000
Current waelth - 400
Total wealth - 6400
Total years - 80
Hence, for smooth consumptionover life time, per year consumption - 6400/80 = 80 per year.
2):- show how income consumption and wealth evolve over time.
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