Consider a family where both the husband and wife work, and assume each spouse ha three more years to work (after the current year) before retirement. Following Table indicates the projected combined salary over the remaining working years if they each stay with their current employers. It also shows the combined salary they can expect if they relocate and change employers. Year Combined salary at Current Job Combined salary at New Job 1 $80,000 $83,000 2 $82,000 $87,000 3 $85,000 $92,000 Suppose the total cost of moving, including direct expenses, foregone earnings, and psychic costs (costs of leaving friends, coworkers, familiar surroundings, etc.) total $10,000. Assume all costs are incurred during the current year (year 0). a. If the discount rate is equal to the market interest rate of 6%, is this investment in mobility worthwhile?
Consider a family where both the husband and wife work, and assume each spouse ha three more years to work (after the current year) before retirement. Following Table indicates the projected combined salary over the remaining working years if they each stay with their current
employers. It also shows the combined salary they can expect if they relocate and change employers.
| Year | Combined salary at Current Job |
Combined salary at New Job |
| 1 | $80,000 | $83,000 |
| 2 | $82,000 | $87,000 |
| 3 | $85,000 | $92,000 |
Suppose the total cost of moving, including direct expenses, foregone earnings, and psychic costs
(costs of leaving friends, coworkers, familiar surroundings, etc.) total $10,000. Assume all costs are
incurred during the current year (year 0).
a. If the discount rate is equal to the market interest rate of 6%, is this investment in mobility worthwhile?
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