Question

Maria Turner has just graduated from college with a degree in accounting. She had planned to enroll immediately in the master’s program at her university but has been offered a lucrative job at a well-known company. The job is exactly what Maria had hoped to find after obtaining her graduate degree.

In anticipation of master’s program classes, Maria has already spent $450 to apply for the program. Tuition is $8,000 per year, and the program will take two years to complete. Maria’s expected salary after completing the master’s program is approximately $60,000. If she pursues the master’s degree, Maria would stay in her current home that is near the campus and costs $600 per month in rent. She would also remain at her current job that pays $25,000 per year. Additionally, Maria’s immediate family is nearby. She spends considerable time with family and friends, especially during the holidays. This would not be possible if she accepts the job offer because of the distance from her new location.
    
The job Maria has been offered includes a salary of $50,000. She would have to relocate to another state, but her employer would pay the $5,000 for moving expenses. Maria’s rent in the new location would be approximately $800 per month. The new location is a fast-growing, active city that offers a number of cultural activities that Maria would enjoy. The city is also home to Maria’s favorite Major League Baseball team, and she would expect to buy season tickets.   

Required:
1. Help Maria make her decision by categorizing the factors involved in making her choice. Complete the following chart regarding the factors in Maria’s decision. A single factor may have multiple columns checked.

Answer 1

Answer:

Relevant	Irrelevant	Sunk Cost	Qualitative
$450 spent on application fee		Yes	Yes
$8,000 per year tuition	Yes
$60,000 salary with master’s degree	Yes
$600 per month current rent	Yes
$25,000 current salary	Yes
Time spent with family and friends	Yes			Yes
$50,000 new salary	Yes
$5,000 moving expenses		Yes
$800 rent per month in new location	Yes
Cultural activities in the new location	Yes			Yes
Ability to have MLB season tickets	Yes			Yes

.

a	Rent	$200
b	Salary per year for the next two years	$25,000
c	Salary per year after two years	$10,000
d	Moving expenses

Explanation:

a.	Rent will be $200 more per month if she accepts the job offer.
b.	For the next two years, salary will be $25,000 ($50,000 – $25,000) more per year if she accepts the job offer.
c.	After two years, salary will be $10,000 ($60,000 – $50,000) more per year if she completes the master’s degree.
d.	Moving expenses are not differential (relevant) since the employer pays the cost.

.

______________

Really hope this helps! Thankyou.

______________