Calculate the present value for both john and amy in mobile

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Assignment:

John and Amy currently live in Mobile, AL. Right now, John makes $30,000 per year while Amy makes $40,000 per year. Yesterday, Amy got a job offer in Topeka, KS for $50,000, and John received an offer for $40,000. Assume that both live for 4 periods and have the same discount rate of 10%. John has family in Mobile, so his moving costs are $30,000. Amy misses the snow, so her moving cost are less at only $10,000.

(a) Calculate the present value for both John and Amy in Mobile.

(b) Calculate the present value for both John and Amy in Tulsa.

(d) Who is the tied mover? Who is the tied stayer? Explain.

(e) Now, let's assume they only live for 2 periods. What is their present value in both cities now?

(f) Would John move if single now? Would Amy? Would they move together? Explain.

(g) Who is the tied mover in this case? Who is the tied stayer in this case? Explain.

Reference no: EM133265031

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