Analyze the situation and explain how you would make a decision.You are leasing a summer home for twelve weeks and are required to cut the grass every week. You can buy a new power mower for $340 and sell it at the end of the summer for $100. You can rent a power mower for $20 per day. The neighbor's son will charge you $10 per hour for 2 hours and provide his own equipment. Which is the best option?

Question

What will be an ideal response?

Answer 1

Answers may vary. One possibility: 
Option 1 (buying a power mower) will cost you $240 ($340 - $100).
Option 2 (renting a power mower) will cost you $240 (12 × $20).
Option 3 (hiring the neighbor's son) will cost you $240 ($10 × 2 × 12).
The cost of each of the three options appears to be equal. Let's see if there are hidden factors that might help you make a decision. Options 1 and 2 require you to mow the lawn yourself each week. Your time could be spent doing other things (including earning money!), so this is a hidden expense. Then again, you might appreciate the opportunity to exercise, get a tan, and meet the neighbors; so depending on your preferences this could actually be a hidden benefit. Option 1 requires you to resell the mower at the end of the summer. Unless there is a buyer in place (e.g., has the owner of the home or the hardware store already offered to buy it back?), you will have to spend time and energy negotiating the sale of the used mower. Option 2 most likely requires you to pick up and drop off the mower each week. When all the costs are considered, Option 3 might end up being the least expensive, but there are some hidden factors there, too. What happens if the neighbor's son does an unsatisfactory job? What if it takes him more than 2 hours to complete the job? Are you obliged to pay him for the additional time?