3. If instead their discount rate were 8%, how many years should they attend school? a. 9 years b. 10 years c. 11 years d. 12 years e. f. 13 years 14 years 4. Short answer: why can't we simply compare earnings of high school graduates to college graduates to estimate the effect of a college education on earnings?
3. If instead their discount rate were 8%, how many years should they attend school? a. 9 years b. 10 years c. 11 years d. 12 years e. f. 13 years 14 years 4. Short answer: why can't we simply compare earnings of high school graduates to college graduates to estimate the effect of a college education on earnings?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Please help with #3 and 4
thank you
![Consult the table below, and answer the following questions:
Schooling
Salary
$18500
$21000
$23000
$24800
9
10
11
12
13
14
1. What is the marginal rate of return for the 10th year of schooling in absolute terms?
a. $2500
b. $21000
C. -$2500
d. Uncertain without knowing the price of tuition.
2. If this person's discount rate is 4%, how many years should they attend school?
(Hint: convert the MRR to percentage terms)
a. 9 years
b.
$26200
$27000
10 years
11 years
12 years
e. 13 years
f.
14 years
c.
d.
3. If instead their discount rate were 8%, how many years should they attend school?
a. 9 years
b. 10 years
c. 11 years
d.
12 years
e. 13 years
f. 14 years
4. Short answer: why can't we simply compare earnings of high school graduates to
college graduates to estimate the effect of a college education on earnings?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd47d2725-9ed4-4a07-8ea4-b309d33139a1%2F2ed5344e-2a65-4212-a2da-89233d88bfd5%2Fwkywn8h_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consult the table below, and answer the following questions:
Schooling
Salary
$18500
$21000
$23000
$24800
9
10
11
12
13
14
1. What is the marginal rate of return for the 10th year of schooling in absolute terms?
a. $2500
b. $21000
C. -$2500
d. Uncertain without knowing the price of tuition.
2. If this person's discount rate is 4%, how many years should they attend school?
(Hint: convert the MRR to percentage terms)
a. 9 years
b.
$26200
$27000
10 years
11 years
12 years
e. 13 years
f.
14 years
c.
d.
3. If instead their discount rate were 8%, how many years should they attend school?
a. 9 years
b. 10 years
c. 11 years
d.
12 years
e. 13 years
f. 14 years
4. Short answer: why can't we simply compare earnings of high school graduates to
college graduates to estimate the effect of a college education on earnings?
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