Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. suppose an individual has a high school degree and

Suppose an individual has a high school degree and 15 working years remaining. The discount...

60.1K

Verified Solution

Question

Accounting

image

Suppose an individual has a high school degree and 15 working years remaining. The discount rate is 5%. With this level of education, this individual can earn $32,000 per year for those 15 years before retiring. a. What is the present value of future income for this worker? b. This worker has the option to go to college and earn a degree. The total cost of attending college (including tuition, fees, books, etc.) is $15,000 per year, and it takes four years to earn a degree The worker would then earn the average salary of a college-educated worker, $60,000, for the remainder of the 15 years. Assume you cannot work while in school. What is the present value of income if this person goes to college? c. Suppose there is a final option: A free junior college. There is no cost to attend. It takes 2 years to earn a degree, but students cannot work while they take classes. After graduation, students earn $42,000 per year. What is the present value of income if the worker chooses this option? d. If the worker seeks to maximize his or her present value of income, which of the three options will be chosen? Briefly defend your

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students