1. You have a project that costs $50,000 and will return $80,000 in 3 years. Your marginal capital gains tax rate on the $30,000 gain will be 37.5%. Treasuries pay a rate of return of 8% per year; munis pay a rate of return of 3% per year. What is the NPV of your project?
2. If the private sector is a net saver (e.g., leaving the public sector as a net borrower), does Uncle Sam have an incentive to reduce or increase inflation?