PV of Income Path: Y1=100, Y2=125 & r=0.5

[oswald]

Homework Statement

What is the permanent income that corresponds to present value of the two period income path Y 1 =100, Y 2 =125 for the real interest rate r=.5? (Note: 50% not ½%!)

Homework Equations

PV = Y1 + Y2/(1+r)^t

The Attempt at a Solution

Correct Answer:

a) 110

I did Pv = 100 + 125/1,5 = 183, but the answer is 110!?

 

[oswald]

i found the anser, it s the definition

1+r/2+r x y1 + y2/1+r !

its 109,8