2. From the College Scorecard, median annual cost of attending college is $12,871. Median salary for college attendees is $58,880 (using past data based on tax data instead of surveys). Median salary of someone who does not attend college is roughly $30,336. Suppose everyone retires at age 65, everyone leaves high school at age 18, and college lasts 4 years. Within the same year, costs and earnings arrive simultaneously. a. What is the present discounted value of working immediately instead of going to college if the discount rate is 0.05 (R=1(1.05))? What is the present discounted value of going to college? Financially speaking, is going to college a good deal (assuming you would be continuously working and no wage growth)? Hint: 1+R+R²+..+R46=(1-R47)/(1-R). 1+R+R²+R³=(1-R*)/(1-R). Rª+R$+...+R46=(R4- R47)/(1-R).

2. From the College Scorecard, median annual cost of attending college is $12,871. Median salary for college attendees is $58,880 (using past data based on tax data instead of surveys). Median salary of someone who does not attend college is roughly $30,336. Suppose everyone retires at age 65, everyone leaves high school at age 18, and college lasts 4 years. Within the same year, costs and earnings arrive simultaneously. a. What is the present discounted value of working immediately instead of going to college if the discount rate is 0.05 (R=1(1.05))? What is the present discounted value of going to college? Financially speaking, is going to college a good deal (assuming you would be continuously working and no wage growth)? Hint: 1+R+R²+..+R46=(1-R47)/(1-R). 1+R+R²+R³=(1-R*)/(1-R). Rª+R$+...+R46=(R4- R47)/(1-R).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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