Sarah lives in Lusaka and currently works as a domestic worker for a family that pays her K30,000 per year. She has recently been given an offer of employment as a cleaner at a large mine in Solwezi where salary would be K35,000 per year for the next 3 years. Living costs in Lusaka and Solwezi are similar, but relocation would cost her K5,000. After 3 years, Sarah plans to quit work altogether and start college. Sarah reckons that she can only move if her additional savings would be at least K2,500 in today's terms. Her personal discount rate is 7%. Kindly advise Sarah whether moving to the new job in Solwezi would be worth it or not. Clearly present your workings.
Sarah lives in Lusaka and currently works as a domestic worker for a family that pays her K30,000 per year. She has recently been given an offer of employment as a cleaner at a large mine in Solwezi where salary would be K35,000 per year for the next 3 years. Living costs in Lusaka and Solwezi are similar, but relocation would cost her K5,000. After 3 years, Sarah plans to quit work altogether and start college. Sarah reckons that she can only move if her additional savings would be at least K2,500 in today's terms. Her personal discount rate is 7%. Kindly advise Sarah whether moving to the new job in Solwezi would be worth it or not. Clearly present your workings.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Sarah lives in Lusaka and currently works as a domestic
worker for a family that pays her K30,000 per year. She has
recently been given an offer of employment as a cleaner at a
large mine in Solwezi where salary would be K35,000 per
year for the next 3 years. Living costs in Lusaka and Solwezi
are similar, but relocation would cost her K5,000.
After 3 years, Sarah plans to quit work altogether and start
college. Sarah reckons that she can only move if her
additional savings would be at least K2,500 in today's terms.
Her personal discount rate is 7%. Kindly advise Sarah
whether moving to the new job in Solwezi would be worth it or
not. Clearly present your workings.
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