Anne Larson graduated from Prestige U. three years ago with a degree in accounting. She currently is a rising star in a national accounting firm. Although she enjoys her job, Anne has decided to leave and pursue an MBA as a way to accelerate her career. To this end, Anne has procured admission to two top-tier MBA programs in California. Having grown up in Baltimore, Maryland, and currently stationed in Cleveland, Ohio, Anne is eager to spread her wings and explore sunny California!

The following table lists nine decisions that Anne likely will be making in the near future:

Decision # Description of Decision

1 Reconsider the decision to get an MBA. (Anne has not yet quit her job!)

2 Decide whether to pay first-semester tuition by check or by credit card. (Each month, Anne pays off her credit card balance in full.)

3 Choose a major (accounting, finance, or marketing).

4 Choose the courses to take in the first semester.

5 Decide whether to buy new clothes (to fit the student lifestyle) or to make do with her current business clothes.

6 Decide whether to have a part-time job while in the MBA program.

7 Decide whether to spend the next few weeks brushing up on math and economics or to spend the time taking a vacation before school starts.

8 Decide whether to live in a studio apartment or to share a two bedroom apartment.

9 Choosing which of the two MBA programs to join.

Required:

a. Classify each decision according to its time horizon (short term or long term).

Provide a brief rationale for each classification.

b. Consider the following three costs associated with going to school:

(1) Tuition,

(2) Housing, and

(3) Books.

For decisions 1 and 2 (i.e., reconsidering whether to get the MBA and deciding how to pay tuition), classify whether or not each of these three costs is controllable. What relation do you observe between the decision horizon and cost controllability?