Banking on a Beard Award - Assignment Example

She will not gain from the business because the business will start making profits at the second year. Therefore, she will lose $135,000 plus the 25 percent bonus if she quits. If she considers the chances of getting promoted after the second year, then she will be losing 202,500 after getting the 50 percent pay raise. Then during the second year, she will have started getting profits from his business. Assuming that the net profit if her business is a modest success is 20 percent in the second year, then she will make a total of $40,000 during the second year.

Therefore, the opportunity cost of leaving her current job will have lessened by the second year. In the third year, her profits will increase to 25 percent which means that she will get a profit of $50,000 in the third yea assuming that her business is a modest success. If she is not promoted in the three years, Jennifer will still be making earning $135,000 every year. there is also a probability that she will be terminated in the first year if she does not get the promotion which is not certain because she is competing with three other colleagues.

Recommendations I would advise Jennifer to quit her current job and pursue her dream of becoming a restaurateur. This is because she has a 40 percent probability of succeeding in business compared to retaining her position. Jennifer has a 30 percent likelihood of losing her job because after the first year she will be promoted, retained in her current position or fired. Considering these options, it is better to pursue the business option. Suppose her business is a huge success and makes 20 percent profit in the first year 40 percent in the second year and 70 percent in the third year, then Jennifer will make $40,000, $80000 and $140,000 respectively for the three years.

This indicates that she will have started to make an equivalent of what she is earning every year in her job. This justifies the decision to quit her job because it is not even certain whether she will still be holding the position by the third year. rather than wait until she is terminated in order to pursue her passion, Jennifer should do it right away because then she is not under any pressure and she has already saved for the initiative. She has an advantage in that she is a chef and has adequate experience in the trade, which raises the probability of succeeding in the business.

Her move is well calculated considering that she has a target market in mind, which will include small- and medium-sized business customers in addition to their families. Her employer is also supportive and will be willing to finance her if her business plan is viable. Conclusion Jennifer should quit her position and pursue her passion to become a restaurateur because according to the decision tree and the assumptions in profits, she will be making an equivalent of her annual wages in profits in her venture.

She should also be motivated to quit her position because she is not guaranteed of the job as she has a 33 percent probability of getting a termination. Decision trees are significant tools of drawing a conclusion because they assist in clarifying the issues concerned and solve the predicament. In this case, the decision tree has assisted in calculation of the profits that Jennifer is likely to make while analyzing her future in her job in order to make a decision. Jennifer should thus forfeit her position and venture into business because she has a 40 percent probabili