Vanessa’s utility function is U(c1, c2) = c1/21 + 0.83c1/22, where c1 is her consumption in period 1 and c2 is her consumption in period 2. In period 2, her income is 4 times as large as her income in period 1. At what interest rate will she choose to consume the same amount in period 2 as in period 1? (Choose the closest answer.)
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