Income stream {yh,yl,yh,yl,…}\{y_h, y_l, y_h, y_l, \ldots\}{yh,yl,yh,yl,…}, discount factor β∈(0,1)\beta\in(0,1)β∈(0,1). Find constant cˉ\bar ccˉ with equal present value.
β(yh+yl)/(1−β)\beta(y_h + y_l)/(1-\beta)β(yh+yl)/(1−β)
β2(yh+yl)/(1−β)\beta^2(y_h+y_l)/(1-\beta)β2(yh+yl)/(1−β)
β2(yh+yl)(1−β)\beta^2(y_h+y_l)(1-\beta)β2(yh+yl)(1−β)
(yh+βyl)/(1+β)(y_h + \beta y_l)/(1+\beta)(yh+βyl)/(1+β)
