Garth Inherited $25,000

Garth inherited $25,000. He needs to decide now much to spend now and how much to save for later. If he saves the money, then he can earn 15% interest on the total before he spends it. Using the information about his marginal utility in the table below, Garth should:

A) spend $5,000 now and $22,250 in the future
B) spend nothing now and $28,750 in the future
C) spend $15,000 now and $13,500 in the future
D) spend $10,000 now and $16,750 in the future

Correct Answer:

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