Chavez S. A. Chavez​ S. A., a Venezuelan​ company, wishes to borrow ​$7,500,000 for eight weeks. A rate of ​% per annum is quoted by potential lenders in New​ York, Great​ Britain, and Switzerland​ using, respectively,​ international, British, and the​ Swiss-eurobond definitions of interest​ (day count​ conventions). Although all three currency markets assume a​ 360-day year for interest rate​ calculations, the U. S. and British markets use the exact number of days in the period in​ question, 56 days in this​ case, while the Swiss market assumes a standardized​ 30-day month. From which source should Chavez​ borrow? The interest charge on the principal from lenders in New York is ​$ nothing. ​(Round to the nearest​ cent.)

3. saving two consumers, larry and jeff, have utility functions defined over the two periods of their lives: middle age (period zero) and retirement (period 1). they have the same income in period 0 of m dollars and they will not earn income in period 1. the interest rate they face is r. larry’s and jeff’s utility functions are as follow. = 0.5 + 0.5 and = 0.5 + 0.5 for each person is between zero and one and represents each consumer’s temporal discount econ 340: intermediate microeconomics. ben van kammen: purdue university. rate. a. write the budget constraint that applies to both jeff and larry in terms of consumption in each period and ), interest rate, and m. b. what is larry’s and what is jeff’s marginal rate of intertemporal substitution? c. what is the slope of the budget constraint? d. write each consumer’s condition for lifetime utility maximization. e. re-arrange the conditions from part (d) to solve for the ratio, . f. if > which consumer will save more of his middle age income? g. if > 1 1+ , in which period will larry consume more: = 0 or = 1?