Question

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 and Internet. This job pays $45,000 per year. The second job is far away from your​ parents' house, so​ you'll have to rent an apartment with parking ​($12,500 per​ year), buy your own food ​($2,250 per​ year), and pay for your own cable and Internet ​($950 per​ year). This job pays$50,000 per year. You still plan to do laundry at your​ parents' house once a week if you live in the​ city, and you plan to go into the city once a week to visit with friends if you live at home.​ Thus, the cost of operating your car will be about the same either way. In​ addition, your parents refuse to pay for your cell phone service​($700 per​ year).

Requirement 1. Based on this information​ alone, what is the net difference between the two alternatives​ (salary, net of relevant​ costs)?

Begin by computing the net salary for each alternative. ​(Complete all answer boxes. Enter a​ "0" for any zero​ balances.)

	Job # 1
Salary
Less: Relevant expenses
Salary, net

Job # 2

The net difference between the two jobs is $

.

I would save this much money if I chose▼to live at home and take Job #1.

to live at home and take Job #2.

to rent an apartment and take Job #1.

to rent an apartment and take Job #2.

Requirement 2. What information is​ irrelevant? Why?

The ▼( costs of doing laundry, operating the car, and paying for cell phone service are, costs of food, rent, and cable TV are, salaries earned are,) irrelevant because they▼ (differ between the two alternatives, do not differ between the two alternatives ,will be increasing over time.)

Requirement 3. What qualitative information is relevant to your​ decision?

I might consider whether▼( I would like to live with my parents again ,the cost of doing laundry at my parents will be too much ,the cost of operating my car will be too much). I would benefit if I▼ (lived at home, rented an apartment​,)▼I may decide it isn't worth it

I might end up paying my parents rent

I might have to pay more taxes

Requirement 4. 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? If I want Job​ #2 and I want to live at​ home, I will benefit by the ▼(lower salary and the higher living expenses, higher salary and the lower living expenses). ​However, I will need to factor in ▼(the chance that my parents would want me to pay some rent ,the chance my car breaks down ,the higher costs of commuting to work by car (gas, tolls, service) or train (fare)). ​Qualitatively, I will want to consider whether the  ▼(risk of my car breaking down is too high, time spent commuting is better than hanging around the apartment, time spent commuting is worth the extra money I will be netting from living at home.)

Answer 1