Peter has just graduated from high school. He will live for three more periods and is considering three alternative education-work options. He can start working right away, earning $100,000 in period 1, $110,000 in period 2, and $90,000 in period 3. He can also go to college in period 1, spending $10,000 in tuition and books in that period, and then earn $150,000 in periods 2 and 3. Finally, he can get a doctorate degree in period 2 after completing his college education. If he gets a doctorate degree he will not need to pay for tuition or books in period 2 (he will receive a fellowship) and he will earn $300,000 in period 3. The rate of discount is 20 percent. What should Peter do? (Hint: Assume period one is the current period.)

Peter has just graduated from high school. He will live for three more periods and is considering three alternative education-work options. He can start working right away, earning $100,000 in period 1, $110,000 in period 2, and $90,000 in period 3. He can also go to college in period 1, spending $10,000 in tuition and books in that period, and then earn $150,000 in periods 2 and 3. Finally, he can get a doctorate degree in period 2 after completing his college education. If he gets a doctorate degree he will not need to pay for tuition or books in period 2 (he will receive a fellowship) and he will earn $300,000 in period 3. The rate of discount is 20 percent. What should Peter do? (Hint: Assume period one is the current period.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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