Hey everyone,
Why do you take the 12000$ and 600$? In the text it is only mentioned that the is "able" to spend these amounts, but willing to spend less. Why do you then assume that he spends 100% of what he is able to do?
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Why do you take the 12000$ and 600$?
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I agree with Denis.
Importantly, for every case we have to be clear about the objective, the maximization criteria (client goals or 2nd objective in a sense), and the constraints.
Here, we have:
Objective/Maximization Criteria: "To earn enough money with the “investment” section of the cellar in order to subsidize whatever I consume in the “drinking” section over time"
Constraint: "I'm obviously constrained by several things: the amount of money I am able to spend, the amount of wine I can (or want to) drink, the space available for the cellar"
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I only took a brief look, but I understand it the following way.
2 parts of the basement - consumption / investment.
2 money-spending patterns: 1,500$ 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?
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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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