Hector's wealth is zero,he expects to work for another 45 years at a constant salary of ?$80 000 and live for another 60 years.Assuming taxes are zero,if Hector completely smooths consumption over his lifetime,his annual consumption is
A) $60 000.
B) $62 222.
C) $80 000.
D) $106 667.

Question

Quizplus · Accepted Answer

Hector's total lifetime income is $80,000 x 45 = $3,600,000.  Since he expects to live for another 60 years, his annual consumption is $3,600,000 / 60 = $60,000.

Hector's Wealth Is Zero,he Expects to Work for Another 45