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Question #3: It is January 1st, 2020, you just turned 25-years-old. You are a high-school (only) graduate working only 40 hours per week -- playing video games for the remainder of the week -- and earning $15 per hour. It is a relatively safe and secure job (immune to viruses) and you plan to work at this job for the next 40 years of your life, after which you will retire at age 65; obviously to play video games for the rest of your life. Also, assume that your salary (i.e. minimum wage) increases by 3% wage inflation, fixed until your retirement. For this question, ignore income taxes, CPP, EI, and vacation entitlements. (Yes, totally unrealistic, but we must start somewhere.)

Part A: You are considering enrolling in a full-time program of study (BA degree, college diploma, extended technical certificate, etc.) that will require you to stop working for 4 fulltime years and pay tuition of $25,000 per year for each of those 4 years. The benefit of this big investment in your human capital is that when you graduate at the age of 29, your wage will quadruple in real terms relative to what it would have been. So, for example, instead of earning $15 per hour (in real dollars), it would be $60 per hour (in real dollars), etc. What is the Internal Rate of Return (IRR) from this investment in your human capital? Note that I would like to see (only) two digits in your answer, since anything beyond that is meaningless given all the assumptions you will have to make. Please state very clearly any-and-all further assumptions you are making in answering this question.

Part B: How does the IRR change if this person is 40-years-old (instead of 25), and plans to retire at age 65. All other details in the question remain exactly the same. Explain.

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