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Mathematics, 23.11.2019 03:31 alyssaxsanchez

Paul has an opportunity for a job that increases his income $20,000 a year for the rest of his career. however, the firm might be moving. the uncertainty about moving (σt ) increases with how far in the future it is considered, and is represented by σt = exp(t) . let his ability to handle uncertainty be described by h = 100. this means if the uncertainty at t years is less than h, he does not discount the future. however, he can reduce the uncertainty he has to handle by discounting future years by exp(-pt), where p is the discount rate, using the formula for discounted uncertainty:

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