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
Answer: B
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