Samantha's wealth is $100 000,she expects to work for another 30 years at a constant salary of $200 000 and live for another 50 years.Assume yearly taxes are $50 000 and that Samantha completely smooths consumption over her lifetime.Calculate the following:
a. Samantha's annual consumption
b. Samantha's annual consumption if she receives a one-time tax rebate of $10 000 during her first year of work
c. The amount of the tax rebate that Samantha will save during her first year of work

Question

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The Answer of Samantha's wealth is $100 000,she expects to work for another 30 years at a constant salary of $200 000 and live for another 50 years.Assume yearly taxes are $50 000 and that Samantha completely smooths consumption over her lifetime.Calculate the following:
a. Samantha's annual consumption
b. Samantha's annual consumption if she receives a one-time tax rebate of $10 000 during her first year of work
c. The amount of the tax rebate that Samantha will save during her first year of work

Samantha's Wealth Is $100 000,she Expects to Work for Another