f the price of attending Big Benefits University is $8,000 a year for tuition, fees, books, and and $25,000 in foregone earnings, what is the marginal cost of attending, if it takes you 5 years to graduate, and you assume a 3% annual inflation rate? If the average college graduate makes $38,000 more every year than the average high school graduate, what is the cumulative marginal benefit of a college education if the average college graduate works for 40 years, assuming a 3% inflation rate? c.In this scenario does it make sense to go to college, explain your answer.

f the price of attending Big Benefits University is $8,000 a year for tuition, fees, books, and and $25,000 in foregone earnings, what is the marginal cost of attending, if it takes you 5 years to graduate, and you assume a 3% annual inflation rate? If the average college graduate makes $38,000 more every year than the average high school graduate, what is the cumulative marginal benefit of a college education if the average college graduate works for 40 years, assuming a 3% inflation rate? c.In this scenario does it make sense to go to college, explain your answer.

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter13: Investment Fundamentals

Section: Chapter Questions

Problem 3DTM

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9. How much is a college education worth? In the text, we supposed a college education raised a person's wage by $30,000 per year, from $40,000 to $70,000. Assume the interest rate is 3% and there is no growth in wages, then answer the following. 1. Suppose you are a high school senior deciding whether or not to go to college. What is the present discounted value of your labor income if you forgo college and start work immediately? 2. As an alternative, you could pay $20,000 per year in college tuition, attend for 4 years, and then earn S70,000 per year after you graduate. What is the present discounted value of your labor earnings under this plan? (Compute this value from the point of view of a high school senior.) 3. Discuss the economic value of a college education.
Suppose that a young couple has just had their first baby and they wish to ensure that enough money will be available to pay for their child's college education. Currently, college tuition, books, fees, and other costs, average $12,500 per year. On average, tuition and other costs have historically increased at a rate of 4% per year. Assuming that costs continue to increase an average of 4% per year, how much is the tuition and other costs for one year for this student in 18 years when she enters college?
6. Calculating Rates of Return Assume the total cost of a college education will be $235,000 when your child enters college in 18 years. You presently have $53,000 to invest. What annual rate of interest must you earn on your 03 investment to cover the cost of your child's college education?
Assume the total cost of a college education will be $350,000 when your child enters college in 15 years. You presently have $67,000 to invest.What annual rate of interest must you earn on your investment to cover the cost of your child’s college education?
Because you study at AUIS when you graduate, we expect you to earn $150 more a month than another student who is graduated from another university in Iraq. If you invest and earn 10% interest annually compounding semi-annually on the extra $150 you have earned for your entire working life from age of (22 – 65). What extra value studying at AUIS has given to you? in another-word, what is the future value of the extra money you have earned?
Assume the total cost of a college education will be $365.000 when your child enters college in 18 years. You presently have $59,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child's college education?
1. Jackie has just finished high school. She will live for two more periods, and she needs to choose a career path. She can either take a job right now as an Uber driver $28,000 in each of the two periods. Or she can get more education in period one to become an economist. Tuition in the first period would be $25,000 and she would earn $85,000 in the second period with her economics degree. a) Suppose the discount rate is 5% (r=.05). If Jackie wants to maximize the present value of her lifetime income, what should she do? Explain and show your calculations. b) Suppose the discount rate is 10% (r= .10). What should Jackie do? Explain and show your calculations c) Suppose the discount rate is 5% but suppose tuition costs are $30,000. What should Jackie do? Explain and show your calculations.
You estimate a college education will be $300,000 when your child enters college in 18years. You presently have $70,000 to invest. What annual rate of interest must you earn on yourinvestment to cover the cost of your child’s college education?
How much do you need to save each year for 30 years in order to have $775,000, assuming you are investing the money in an account that earns 8%? How much of the $750,000 comes from principal (you’re out of pocket costs)?
Suppose that a young couple has just had their first baby and they wish to ensure that enough money will be available to pay for their child's college education. Currently, college tuition, books, fees, and other costs average $ 12 comma 700$12,700 per year. On average, tuition and other costs have historically increased at a rate of 44% per year. Assuming that college costs continue to increase an average of 44% per year and that all her college savings are invested in an account paying 77% interest, then the amount of money she will need to have available at age 18 to pay for all four years of her undergraduate education is closest to: PLEASE SOLVE IN EXCEL AND SHOW THE WORK
6. Calculating Interest Rates. Assume the total cost of a college education will be $290,000 when your child enters çollege in 18 years. You presently have $35,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child's college education?
How much do you need to save each year for 30 years in order to have $775,000, assuming you are investing the money in an account that earns 8%? How much of the $775,000 comes from contributions (your out of pocket costs)?