In a two-period model, a household has an income of $20,000 in period one and an income of $25,000 in period two. The household faces an interest rate of 50 percent.What is the present value of the household's income if the income in period one increases to $30,000?
A)$39,000
B)$46,666.66
C)$40,555.65
D)$50,000

Question

In a two-period model, a household has an income of $20,000 in period one and an income of $25,000 in period two. The household faces an interest rate of 50 percent.What is the present value of the household's income if the income in period one increases to $30,000?
A)​$39,000
B)​$46,666.66
C)​$40,555.65
D)​$50,000

Quizplus · Accepted Answer

The Answer is B

In a Two-Period Model, a Household Has an Income of $20,000