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Author Question: Clifford lives by the motto Eat, drink, and be merry today, for tomorrow doesn't matter. If ... (Read 149 times)

Lobcity

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on: Jul 1, 2018
Clifford lives by the motto Eat, drink, and be merry today, for tomorrow doesn't matter.
 
  If today's consumption is represented by x and tomorrow's consumption is represented by y, then which of the following best represents Clifford's utility function? A) U = x - y
  B) U = x/y
  C) U = x
  D) U = y

Question 2

A major corporation hires high school students on a part-time basis. It offers a reward of 5,000 to any of its high school seniors who graduate college in four years.
 
  What is the present value of that reward to a student who just finished her junior year of high school, assuming a nominal rate of interest of 8?


cloudre37

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Reply #1 on: Jul 1, 2018
Answer to Question 1

C

Answer to Question 2

5000/(1.08 )5 = 3,675.15


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