Sheldon, Leonard, Raj, and Howard have decided to live together for the next five years. Currently,...

 

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Sheldon, Leonard, Raj, and Howard have decided to live together for the next five years. Currently, they live in New York and earn a yearly pay of: Sheldon: $200K Lenoard: $120K Raj: $315k Howard: $150k Assume that the pay will not change over the next five years and r = 3%. Furthermore, the group is thinking about moving to Los Angeles, which will result in the following: Sheldon: moving cost of $5K, new pay of $180K Leonard: moving cost of $5K, new pay of $150K Raj: moving cost of $5K, new pay of $300K Howard: moving cost of $5k, new pay of 100K (a) (8 points) What is the present value of each person's earnings? (b) (4 points) Will the group of friends make the move from New York to Los Angeles? (c) (6 points) Are there any tied-movers or tied-stayers? If so, who? (d) (6 points) Suppose Sheldon and Leonard each value the quality of life in Los Angeles at a total present-value of $40k over the five years and the other two values it at $25k each. Should the group of friends make the move from New York to Los Angeles? (e) (6 points) Using the same information from part (d), are there any tied-movers or tied-stayers? If so, who? Sheldon, Leonard, Raj, and Howard have decided to live together for the next five years. Currently, they live in New York and earn a yearly pay of: Sheldon: $200K Lenoard: $120K Raj: $315k Howard: $150k Assume that the pay will not change over the next five years and r = 3%. Furthermore, the group is thinking about moving to Los Angeles, which will result in the following: Sheldon: moving cost of $5K, new pay of $180K Leonard: moving cost of $5K, new pay of $150K Raj: moving cost of $5K, new pay of $300K Howard: moving cost of $5k, new pay of 100K (a) (8 points) What is the present value of each person's earnings? (b) (4 points) Will the group of friends make the move from New York to Los Angeles? (c) (6 points) Are there any tied-movers or tied-stayers? If so, who? (d) (6 points) Suppose Sheldon and Leonard each value the quality of life in Los Angeles at a total present-value of $40k over the five years and the other two values it at $25k each. Should the group of friends make the move from New York to Los Angeles? (e) (6 points) Using the same information from part (d), are there any tied-movers or tied-stayers? If so, who?