Caitlin has finished her schooling and training to be a dental hygienist. She has two job offers that she is considering.
| | Job 1: Albuquerque, NM | Job 2: Ann-Arbor, MI |
|---|---|---|
| Salary | $54,000 | $61,000 |
| Benefits | $2,500 bonuses, health insurance, 401 K | Health insurance, 401 K |
| Average Monthly Rent & Utilities | $925 | $1,300 |
Which job would offer the best annual income considering the cost of living in each locale?
A. Job 2 is a better choice because the annual income after rent and utilities is $ 59,700 but that of job 1 is $ 55,575.
B. Job 2 is a better choice because the annual income after rent and utilities is $ 45,400 but the income for job 1 is $ 41,900.
C. Job 1 is a better choice because it costs $ 4,500 less per year to live there.
D. The jobs have equal annual incomes of $ 45,400 after rent and utilities so Caitlin should take the job in her favorite
Answer (1)
Calculate the total annual income for Job 1: $54,000 (salary) + $2,500 (bonus) = $56,500. - Calculate the total annual expenses for Job 1: $925 (monthly rent & utilities) \times 12 = $11,100. - Calculate the annual income after expenses for Job 1: $56,500 - $11,100 = $45,400.
Calculate the total annual expenses for Job 2: $1,300 (monthly rent & utilities) \times 12 = $15,600.
Calculate the annual income after expenses for Job 2: $61,000 (salary) - $15,600 = 45 , 400. − B o t hj o b s ha v ee q u a l ann u a l in co m eso f \boxed{ 45,400} after rent and utilities.
Explanation
Calculate Total Annual Income for Job 1 First, let's calculate the total annual income for Job 1 in Albuquerque, NM. This includes the base salary and any bonuses.
Calculate Total Annual Income for Job 1 The salary for Job 1 is $54,000, and the annual bonus is 2 , 500. S o , t h e t o t a l ann u a l in co m e f or J o b 1 i s : $54,000 + 2,500 = 56 , 500 $
Calculate Total Annual Rent and Utilities for Job 1 Next, we need to calculate the total annual cost of rent and utilities for Job 1. The average monthly cost is $925.
Calculate Total Annual Rent and Utilities for Job 1 To find the annual cost, we multiply the monthly cost by 12: 925 \times 12 = $11,100
Calculate Annual Income After Rent and Utilities for Job 1 Now, we subtract the total annual cost of rent and utilities from the total annual income to find the annual income after considering the cost of living for Job 1: 56,500 - 11,100 = $45,400
Calculate Total Annual Income for Job 2 Now, let's calculate the total annual income for Job 2 in Ann Arbor, MI. The salary is $61,000, and there are no bonuses listed.
Calculate Total Annual Income for Job 2 So, the total annual income for Job 2 is: 61 , 000
Calculate Total Annual Rent and Utilities for Job 2 Next, we calculate the total annual cost of rent and utilities for Job 2. The average monthly cost is $1,300.
Calculate Total Annual Rent and Utilities for Job 2 To find the annual cost, we multiply the monthly cost by 12: 1,300 \times 12 = $15,600
Calculate Annual Income After Rent and Utilities for Job 2 Now, we subtract the total annual cost of rent and utilities from the total annual income to find the annual income after considering the cost of living for Job 2: 61,000 - 15,600 = $45,400
Compare Annual Incomes After Rent and Utilities Finally, we compare the annual income after rent and utilities for Job 1 and Job 2.
Compare Annual Incomes After Rent and Utilities For Job 1, the annual income after rent and utilities is $45,400. For Job 2, the annual income after rent and utilities is also $45,400.
Conclusion Since the annual income after considering the cost of living is the same for both jobs, Caitlin should consider other factors such as her personal preferences for the location, the specific job responsibilities, and the benefits packages offered by each employer.
Examples
When deciding between two job offers in different cities, it's crucial to consider the cost of living in each location. For example, if you're offered a higher salary in a city with significantly higher rent and utility costs, your disposable income might end up being the same or even lower than in a job with a lower salary in a more affordable city. By calculating your income after deducting living expenses, you can make a more informed decision about which job truly offers the best financial advantage. This approach helps in making practical financial decisions beyond just the initial salary figure.
