Estimations
What is an estimation?
What is a budget?
Plan for how to use the money during a specific length of time
What is opportunity cost?
Value of the next best alternative you give up when you make a decision.
What is sunk cost?
The cost that has already been incurred and cannot be recovered
True or False: Buying lunch for $8 every school day costs around $160 per month.
True!
True or False: Saving money should be included as part of your budget.
True! Saving money is a key component when making a budget.
True or False: If I have nothing better to do, there is no opportunity cost
True! If no valuable alternatives exist, your opportunity cost is low or zero
True or False: Sunk costs should always be considered when making future decisions.
False. You should never consider sunk cost when making a decision.
How many pennies are in $1 million?
100 million
If your monthly income is $2,500 and your rent is $1,000, what percentage of your income goes to rent?
40%
You have $10 and choose to buy lunch instead of saving it. What is the opportunity cost?
You bought a movie ticket for $15 but the movie is terrible. You stay anyway because you “paid for it.” What is the sunk cost?
$15 OR time spent watching the movie
If minimum wage is $15/hour, how much does someone make working full-time for one year?
$31,200
If you want to save 20% of your $3,000 monthly income, how much should you put into savings each month?
You spend 3 hours watching Netflix instead of studying. What is the opportunity cost?
3 hours watching Netflix OR better grade
You joined a club at school and paid $25 in dues. After a few meetings, you realize you don’t enjoy it. You think about quitting but say, “I can’t stop now—I paid for it.” What’s the sunk cost?
$25