Read the given Analysis 2.1 Case study. The case details two alternate career choices and their financial consequences.
Analysis 2.1 case Study:
You receive two job offers in the same big city. the first job is close to your parents’ house, and they have offered to let you live at home for a year so you won’t have to incur expenses for housing, food, or cable TV. this job pays $49,000 per year. The second job is far away from your parents’ house, so you’ll have to rent an appartment with parking ($9,000 per year) buy your own food ($3,500 per year), and pay for your own cable TV ($550 per year). This job pays $54,00 per year. You still plan to do laundry at your parents’ house one time a week if you live in the city and plan to go into the city one time a week to visit with friends if you live at home. As a result, the cost of operating your car will be about the same either way. Additionally, your parents refuse to pay for your cell phone ($690 per year), and you can’t function without it.
Based on your reading and understanding of the case study, answer the given questions:
What is the net difference between the two alternatives-Salary and net of relevant costs? What information is irrelevant? Why? What qualitative information is relevant to your decision? Assume you really want to take job 2, but you also want to live at home to cut costs. What new quantitative and qualitative information will you need to incorporate in your decision?
What is the net difference between the two alternatives-Salary and net of relevant costs?
Answer :
If we look to the starting pays and bills for the both job no:1 and Job no:2 ,we could find that Nob no :1 is best bet. After taking the bills Job No:2 was taken you will only bring at home $ 40,260(54000-9000-3500-550-690)
As against to these in Jon no :1 bring at home $ 48310(49000-690)
So there is difference of $ 8050 (48310-40260) after taking a bills for not living at home
What information is irrelevant? Why?
Answer
Driving in to or out with the friend and laundry because these cost would be same whatever job you select i.e. you select stay at home or live in the city and you need not to add this to your bill
What qualitative information is relevant to your decision?
Answer:
The qualitative information is relevant to your decision is staying at home or moving to the city because if you live in the house you need not to occur the expenses of rent ,food , Phone etc and if you move to the city you need to expense for rent ,food , Phone
Assume you really want to take job 2, but you also want to live at home to cut costs. What new quantitative and qualitative information will you need to incorporate in your decision
Answer: If you really want to take job 2, but you also want to live at home to cut costs , you need the information of the cost of gas and the expenses for payment of parking charges and cost of vehicle maintenance because of the distance to and from work every day
