Suppose you currently earn $30.000 a year. You are considering a job that will i

Question

Suppose you currently earn $30.000 a year. You are considering a job that will increase your lifetime earnings by $300.000 but trial requires on MBA The job WB mean also attending business school for two years at an annual cost of $25,00. You already have a bachelor's degree, for which you Spent $80.000 In tuition and books Which of the above Information the relevant to your decision whether to take the Job? The relevant costs are the $80.000 spent for the bachelor s degree the $50 000 the sewigs of $300.000 taken for business school, and tool wages horn theemployment. The relevant beef the increase. The relevant coats are Pie opportunity cost of taking the you (forgone earnings from your current job) and other things you could have done the money The tuition for the bachelor s degree is a sunk coat and is not relavant. The relevant benefits the increased lifetime earnings $300.000 All the information given in the problem is relevant. The relevant cost is the $50 000 won you pay for business school The relevant benefit is the increase in lifetime earnings of $3000, 000

Explanation / Answer

The option 2 is the most relevant which states that "the relevant costs are the opportunity cost of taking the job (foregone earnings from your current job) and the other things you could have done with the money you need to pay for business school. The tution feesfor bachelors are not important here as you are currently employed and that is factored in it. The relevant benefit is the increased life time earning of $300,000.

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