Question

In 500 words, describe a major financial decision you’ve made. Describe the decision-making process you went through when making this financial choice. Describe the opportunity costs you incurred.

Answer 1

Answer:

The decision-making process consists of the following:

1. Identify the problem.
2. Gather information.
3. Analyze the situation.
4. Develop options.
5. Evaluate alternatives.
6. Select an alternative.
7. Act on the decision.

Recently, I bought a new computer. My decision-making process was as follows:

1. Identify the problem: The computer I used to do homework had broken down. The processor was inoperable. The problem was that I could not effectively do my schoolwork, including doing research, writing papers, and doing math homework that required Excel.

2. Gather information: I found out that a laptop that could handle basic functions and had a wireless network card (for internet access via Wi-Fi) would cost $200. A more sophisticated computer system with a faster processor and software included would cost up to $800.

3. Analyze the situation: The situation was that I had no way of doing my homework without the use of a computer. While I could write papers by hand and do research at the library, these were not viable because I had no way of getting to the library. In addition, my teachers would not accept handwritten papers.

4. Develop options: My options consisted of the following:

• Buy a basic laptop for $200.
• Buy a nicer computer for $800.
• Go to the library to use the computers.
• Stay after school to use the computers.

• Write papers by hand and find other means of doing research and math complex problems.

6. Select a preferred alternative: I quickly eliminated the alternatives of going to the library and staying after school. I do not have transportation that would allow me to go or stay at these places (I take the bus to school and have an after-school job). Also, I already noted that teachers will not accept handwritten work. I spoke to my math teacher, and she explained that a computer is a necessity for our homework. So, I am left with buying a basic laptop or buying a nicer computer. Buying a basic laptop would be a quick fix, and it would be portable. However, I want this computer to last at least five years. I plan to major in engineering in college, and I know the laptop would not have the kind of power I’d need. A nicer computer with a faster processor would last through my high school years and for at least the first two years of college. With some modifications, I could make it last through college. I decide to spend the $800 on a nicer computer.

7. Act on the decision: I don’t have $800 at the moment, so I’ll need to make arrangements with my teachers to borrow a laptop. I will work overtime at the coffee shop, where I work after school each day. After a month, I should have enough money to buy the computer. In the meantime, I’ve arranged with a teacher to use my study hall period and basketball practice time to use the computers at school. This means I’ll sacrifice some playing time, but will get my homework done and keep my grades up.