Hey everyone,
Why do you take the 12000$ and 600$? In the text it is only mentioned that the is "able" to spend these amounts, but willing to spend less. Why do you then assume that he spends 100% of what he is able to do?
I agree with Denis.
Importantly, for every case we have to be clear about the objective, the maximization criteria (client goals or 2nd objective in a sense), and the constraints.
Here, we have:
Objective/Maximization Criteria: "To earn enough money with the “investment” section of the cellar in order to subsidize whatever I consume in the “drinking” section over time"
Constraint: "I'm obviously constrained by several things: the amount of money I am able to spend, the amount of wine I can (or want to) drink, the space available for the cellar"
I only took a brief look, but I understand it the following way.
2 parts of the basement - consumption / investment.
2 money-spending patterns: 1,500$ kick-start for consumption / 12,000$ for investment, HOWEVER every month after that $300 for consumption and $600 for investment.
So the $12,000 and $600 are intended for investment. Why would you not max this out given the returns you expect?
Hello!
TBH, agreed with you. This is why you are always encouraged to ask clarifying questions to the interviewer, who would point you i the right direction.
Hope it helps!
Cheers,
Clara
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