Maryanne expects to work for another 30 years and expects to live another 10 years after she retires.If Maryanne completely smooths consumption over her lifetime,for every $1000 increase in wealth,she will use ________ for consumption each year.
A) $10.00
B) $25.00
C) $100
D) $333

Question

Quizplus · Accepted Answer

Maryanne has 40 years of consumption (30 working years + 10 retirement years). For every $1000 increase in wealth, she will spread it over 40 years, which is $1000/40 = $25 per year.

Maryanne Expects to Work for Another 30 Years and Expects