Time value of money and annuity” please respond to the following:
Joe has been offered a job that would pay him $30,000 per year. However, this job requires Joe to move away from his home and family and start over in a new city. After careful consideration, Joe decides to decline the offer since it wouldn’t be worth the opportunity cost of not being able to spend time with his loved ones. Instead, he takes up a lower paying job of $20,000 per year closer to home.
Even though Joe is making less money each year than if he had taken the first job offer, over time he will realize that this was still the best decision for him financially because of its long-term impact on his quality of life. By staying close to family, Joe will save significant amounts in terms of transportation costs as well as avoid having to make large payments for relocation expenses such as rent or purchasing a new house. Furthermore, by having more time available with his family and friends rather than commuting often or travelling for work purposes can lead to intangible benefits like developing stronger relationships which are invaluable in themselves. In essence by deciding against taking the high paying job offer further away from home joe chose the path with better overall financial outcome due to its higher opportunity cost associated with it