ChatGPT-assisted Job Offer Analysis by NPV and Opportunity Cost

Decision flowchart

Job offer quiz on LinkedIn

I came across this question on LinkedIn.

"You have 2 job offers on the table:

A) £50k per year with a £12k bonus, work from home, but you live in Hull where the cost of living is low. You get a 10% employer pension contribution.

B) In London, a dream job of £95k a year with only a 5% pension contribution. The cost of living is high, and you need to spend four days a week in the office.

Which job offer would you accept?"

I engaged ChatGPT to assess both scenarios using NPV and opportunity cost logic. 

I received the following outcome not immediately but gradually by asking additional questions and double-checking the answers. 

ChatGPT is an excellent tool if you know the subject and guide it towards a meaningful outcome.

Comparing business cases for two job offers

Scenario A (Hull)
Pension Growth 5%
Housing Costs £9,600
Electricity Costs £600
Fitness membership £360
Lunch Costs £2,600
Commuting Costs £0 (WFH)

Scenario B (London, living on the outskirts)
Pension Growth 5%
Housing Costs £24,000
Commuting Costs £3,000
Lunch Costs: £3,120

Calculation of Net Income

Scenario A (Hull)
Income Tax = £12,232
National Insurance Contributions (NIC)= £4,758
Net Income = £45,010
Scenario B (London)
Net Income after Tax and NIC = £64,150

Adjustments for Residual Costs

Scenario A (Hull)
Housing+lunch+electricity+fitness = £13,160
Disposable Income: £31,850 per year
Scenario B (London)
Housing+commuting+lunch = £30,120
Disposable Income: £34,030 per year

Net Present Value (NPV) Comparison

Total NPV in Hull (Including Pension Growth): £160,621
Total NPV in London: £168,923

Opportunity Cost

£168,923 - £160,621 = £8,302.  

Otherwise, your decision should hinge on what you value more: immediate financial benefits and career prospects or long-term personal and professional balance.

To make it NPV-even, you only need to negotiate a 5% salary increase in Hull (to £52,800.)
Even if you are entirely driven by financial considerations, that looks achievable.

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