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Discount rate

Now what can we do ?

That's a family discount in these hard times.

The probability of reaching S prime given that we started state S and apply action A.

That's a family discount in these hard times.

I'll say p, just so it makes sense, p is equal to the percentage off.

60 off.

Yeah.

These are 30 percent off.

Well, that was x.

when the sale has a certain percentage ?

So x minus twenty five percent x is equal to the sale price.

We could have also done it other way.

And it just depended on how the mathematics work out.

Well, I don't give group rates, you know.

Another way to kind of just talk about this is to get the present value of 110 a year from now, we discount the value by a discount rate.

Let's say in every year it's going to make 1.

We could have said Let y equal the discount

5 minus this 2.

Thirty percent off for USC alumni.

What is it about Superman?

Perhaps only at a discount.

This is the difference between the two.

Do you have a student fare?

And this one that was in Kenya, they went around and distributed to people vouchers, discount vouchers.

Then to discount money in the future to the present, we divide it by 1 plus the discount rate so this is a 5 discount rate.

Are there special evening rates?

If I could get it for 90, that's a good deal for me.

We saw that choice number one was the best.

Now what happens after I pose the question, you might want to think about it before I show you the answer what happens if I don't assume a 5 discount rate?

Are there any discount tickets for me?

But what if I wanted to generalize a little bit ?

Be silent. Keep your forked tongue behind your teeth.

Special rates for state and federal employees.

You thought you were giving a 10 sale, suddenly you are giving a 110 sale worst case sort of scenario.

Yeah, but how does it work?

What kind of deal?

It easy to show that this expression over here will always be smaller or equal to 1 over 1 minus gamma times the absolute reward maximizing value and which in this case would be plus 100.

I have some coupons I got last week.

So 2009 money, that's worth 1.

Let x be the price of the product I want to buy, the nondiscount price of the product in the store.

And this risk free is the big assumption.

And actually the whole topic of, how do you decide on the right discount rate?

Even if he wanted to.