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

question 69

Multiple Choice

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 receives an unexpected $20 000 increase in salary his first year of work and he completely smooths consumption over his lifetime,his annual consumption is

• A) $67 500.
• B) $75 000.
• C) $80 000.
• D) $111 111.