2. Character 1 ) Nicholas Tse Assume that he is a wealth maximizer, he will choose a girlfriend that can generate the highest future income. The rice is so soft ~

3. 2) Faye Wong A divorced woman with a 6-year-old daughter,Tong Tong. Her annual income will be 2 million per year

4. 3) Cecilia Cheung Famous Single- singer, as she is less famous now, her annual income will be 1 million per year.

5. Relationship I will choose the one who can earn more $$

6. Assume that Nicholas will choose the one who will generate more future income, and he will be with the girl for 10 years. Now,we discount the future income of Cecilia and Faye into present value first. Interest rate :10% /year

7. Present value of receiving a constant amount at the end of each year for finite number of years. Y Y Y Y — ——— + — —— + — —— + ……… — —— (1+r) ¹ (1+r) ² (1+r) ³ (1+r)ⁿ Y 1 = ——— [ 1 ― — ——— ] r ( 1+r)ⁿ * n = time (number of year)

8. Cecilia will earn 1 million per year, and she will work for 10 years. So the present value of her future income is : 1 million 1 — ————— [ 1 ─ — ————— ] = $6144567 10% (1+10 %)¹ º

9. Faye Wong will earn 2 million per year,and she will work for 10 years. So the present value of her future income is : 2 million 1 ───── [ 1 − — ————— ] = $12289134 10% (1+10 %)¹ º

10. So in this case, Nicholas will choose Faye as she can generate more income ( in terms of present value). We are happy together! I win !

11. Mum, We have a happy family again ~

12. Wait ~ Honey ~ Don’t forget she has a daughter !!! Dad ~

13. But there is a point that Faye has a daughter, Tong Tong and she will spend Faye’s income. Tong Tong will spend $ 1200000 per year, and she will spend Faye’s income for 10 years.

14. So, as Tong Tong will spend $1200000 /year,the present value of Faye´s future income will decrease 2 million 1 ───── [ 1 ─ ───── ] - Tong Tong ’ s expenditure 10% (1+10 %) ¹º 2 million 1 $1200 000 1 = ───── [ 1 − ────── ] − ────── [ 1 − ───── ] 10% (1+10 %) ¹º 10% (1+10 %) ¹º =$12289134 −$7373480 =$ 4915654

15. And Cecilia’s future income ( in terms of present value) remains constant = $6144567 But Faye’s future income( in terms of present value ) decreases =$ 4915654 So Nicholas will choose Cecilia now ~

16. I love You too, Cecilia ~ because you got more money …HaHa I win ~ Fung Fung I love You!!

17. We will go back to Beijing ~ Sorry, Mum

18. By Irene (10) & Cecilia (17) The End