This year Henry will save a certain amount of his income, and he will spend the rest. Next year Henry will have no income, but for each dollar that he saves this year, he will have 1 + r dollars available to spend. In terms of r, what fraction of his income should Henry save this year so that next year the amount he was available to spend will be equal to half the amount that he spends this year?
hi arorag,
Is the answer 1/(3+2R) ?
X - The amount he saves
Y - Amount he spends
for Next Year
Y/2 = X(1+R)
Fraction of money saved this year = X/(X+Y)
Solving the above
X/(X+Y) = X/(X+2X(1 + R)) = 1/(3+2R)
