You have $20,000 of current income and $45,000 of future income. The interest rate between the current and future period is 2 percent. What is the maximum amount you could consume in the future?

Question

Quizplus · Accepted Answer

To find the maximum future consumption, calculate the future value of the current income: $20,000 * 1.02 = $20,400. Add this to the future income: $20,400 + $45,000 = $65,400.

You Have $20,000 of Current Income and $45,000 of Future