Purpose: You have by now successfully framed your decision and analyzed it ethically. In this step, you will analyze your decision economically, focusing on opportunity costs $($trade$-$offs$).$ You may find that the best choice economically is not the most ethical choice! You will practice applying what you learned about classical economics $($Module $03),$ NPV $($Module $05),$ and Decision Trees $($Module $06)$ to your decision. At the same time you are developing those valuable critical thinking, communication, and technology skills.

Task: Prepare a detailed economic analysis of your decision.

$1.$ Edit your document based on each of my comments from Step #$2,$ marking them resolved as you go$.($Read about comments in Word here.$)$

$2.$ Add to your document a new section, "Economic Analysis".

a$.$ Identify your base case $($or default$)$ choice, e$.$g$.,$ community college professor

b$.$ Identify two opportunity costs $($trade$-$offs$)$ of your base case. What are you giving up compared to the alternatives? Estimate the dollar values. Example: if I choose to remain a community college prof., I give up the higher salary of finance $($$$100$k$)$ and the potential pay offs of entrepreneurship $($expected value: $$150$k$).$

c$.$ Identify two benefits at the margin of your base case compared to the others, i$.$e$,$ how is it better than the alternatives? You may have to estimate the economic value of qualitative benefits and harms: estimate what would you be willing to pay to obtain the benefit or avoid the harm. e$.$g$.,$ contributing to a more educated society $(+150$k$),$ intellectual and solitary work, which I like $(+75$k$).$

d$.$ Add an analysis, i$.$ and$/$or ii$.$:

i$.$ Use Excel to calculate the NPV of each of the three options $($cost$-$benefit analysis$)$ at a reasonable interest rate. Include the opportunity costs and future benefits $($Embed the spreadsheet in the document$).$ See, but do not copy, this example: BUS $220$ Term Project Step $3$ Exemplar B$.$pdf

ii$.$ Create a decision tree to evaluate your decision. The first node should have at least three branches for each of your options, leading to uncertainty nodes. At least one branch from an uncertainty node must lead to a second decision node, with at least two branches. Include outcome values, probabilities, and expected values for each of the paths from your first decision node. Recall my example, although yours need not be so complex: Start$-$Up Decision Tree

e$.$ Add a $1/2$ page explanation of your assumptions, analysis, and outcomes. Explain which alternative has the strongest economic justification based on your analysis.

$4.$ Check your work carefully for accuracy, completeness, spelling, grammar, and compliance with our shared values.

$5.$ Submit the same link from Step #$2$ to your revised document, including steps $0,1,2,$ and $3.$ Do not submit a file.