1. After defeating the Dark Lord, Ron's brother offers him a job at Weasleys' Wizard Wheezes. If Ron takes this job, his annual income will be 1 million galleons. Alternatively, Ron can return to Hogwarts to finish school, but then he must give up the job with his brother. Graduating will take him a year and it will cost 10,000 galleons in direct costs. He knows for sure he can become an Auror after finishing his education, at a yearly salary of 800,000 galleons. He thinks that the probability that he becomes Minister of Magic 25 years after graduating (at Year 27) is 25%, and the minister's salary is 10 million galleons per year. Regardless of his choice, he wants to retire in 30 years from now (at Year 30). Assume the interest rate is 5%. Assume all payments are at the beginning of the year and all wages are paid at the beginning of the year. a. If Ron is only concerned with the monetary rewards, will he go back to Hogwarts? If you are using equations, write down the appropriate equations. If you are using excel, submit your excel sheet. Show all your work. b. What probability of becoming Minister of Magic would make him indifferent between going back to school and going to work for his brother? Explain your reasoning. Write down the appropriate equations. You can use excel to make the calculations.
1. After defeating the Dark Lord, Ron's brother offers him a job at Weasleys' Wizard Wheezes. If Ron takes this job, his annual income will be 1 million galleons. Alternatively, Ron can return to Hogwarts to finish school, but then he must give up the job with his brother. Graduating will take him a year and it will cost 10,000 galleons in direct costs. He knows for sure he can become an Auror after finishing his education, at a yearly salary of 800,000 galleons. He thinks that the probability that he becomes Minister of Magic 25 years after graduating (at Year 27) is 25%, and the minister's salary is 10 million galleons per year. Regardless of his choice, he wants to retire in 30 years from now (at Year 30). Assume the interest rate is 5%. Assume all payments are at the beginning of the year and all wages are paid at the beginning of the year. a. If Ron is only concerned with the monetary rewards, will he go back to Hogwarts? If you are using equations, write down the appropriate equations. If you are using excel, submit your excel sheet. Show all your work. b. What probability of becoming Minister of Magic would make him indifferent between going back to school and going to work for his brother? Explain your reasoning. Write down the appropriate equations. You can use excel to make the calculations.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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1. After defeating the Dark Lord, Ron's brother offers him a job at Weasleys' Wizard
Wheezes. If Ron takes this job, his annual income will be 1 million galleons. Alternatively,
Ron can return to Hogwarts to finish school, but then he must give up the job with his
brother. Graduating will take him a year and it will cost 10,000 galleons in direct costs. He
knows for sure he can become an Auror after finishing his education, at a yearly salary of
800,000 galleons. He thinks that the probability that he becomes Minister of Magic 25
years after graduating (at Year 27) is 25%, and the minister's salary is 10 million galleons
per year. Regardless of his choice, he wants to retire in 30 years from now (at Year 30).
Assume the interest rate is 5%. Assume all payments are at the beginning of the year and
all wages are paid at the beginning of the year.
a. If Ron is only concerned with the monetary rewards, will he go back to Hogwarts?
If you are using equations, write down the appropriate equations. If you are using
excel, submit your excel sheet. Show all your work.
b. What probability of becoming Minister of Magic would make him indifferent
between going back to school and going to work for his brother? Explain your
reasoning. Write down the appropriate equations. You can use excel to make the
calculations.
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