Present value of lifetime earnings (1 of 3) Arun, a high-school graduate, is considering whether to pursue a master's degree or start working Immediately. If he decides to pursue a master's, he will spend $40,000 on tuition and books for his undergraduate studies (perlod 1) and $130,000 on tuition and books for his master's (period 2), and afterward he will earn $900,000 for the remainder of his career (period 3). If he decides to start working immediately, he will earn $70,000 per period during the first two periods and $500,000 over the course of the third period. His discount rate is 11%. What is Arun's present value of pursuing a master's degree?
Present value of lifetime earnings (1 of 3) Arun, a high-school graduate, is considering whether to pursue a master's degree or start working Immediately. If he decides to pursue a master's, he will spend $40,000 on tuition and books for his undergraduate studies (perlod 1) and $130,000 on tuition and books for his master's (period 2), and afterward he will earn $900,000 for the remainder of his career (period 3). If he decides to start working immediately, he will earn $70,000 per period during the first two periods and $500,000 over the course of the third period. His discount rate is 11%. What is Arun's present value of pursuing a master's degree?
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter17: Financial Markets
Section: Chapter Questions
Problem 15RQ: What is a dividend?
Related questions
Question
3
![Incorrect
Question 1
Present value of lifetime earnings (1 of 3)
Arun, a high-school graduate, is considering whether to pursue a master's
degree or start working Immediately. If he decides to pursue a master's, he
will spend $40,000 on tuition and books for his undergraduate studies
(period 1) and $130,000 on tuition and books for his master's (period 2), and
afterward he willl earn $900,000 for the remainder of his career (period 3). If
he decides to start working immediately, he will earn $70,000 per period
during the first two periods and $500,000 over the course of the third
period. His discount rate is 11%.
What is Arun's present value of pursuing a master's degree?
6,499,000
Incorrect
Question 2
Present value of lifetime earnings (2 of 3)
What is Arun's present value of starting work Immediately?
3,809,070](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4a16d314-5857-4317-a5de-e63ba9f9d97f%2Fdfaac928-212c-4ff3-a504-9c294a8548fc%2Fszy63eq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Incorrect
Question 1
Present value of lifetime earnings (1 of 3)
Arun, a high-school graduate, is considering whether to pursue a master's
degree or start working Immediately. If he decides to pursue a master's, he
will spend $40,000 on tuition and books for his undergraduate studies
(period 1) and $130,000 on tuition and books for his master's (period 2), and
afterward he willl earn $900,000 for the remainder of his career (period 3). If
he decides to start working immediately, he will earn $70,000 per period
during the first two periods and $500,000 over the course of the third
period. His discount rate is 11%.
What is Arun's present value of pursuing a master's degree?
6,499,000
Incorrect
Question 2
Present value of lifetime earnings (2 of 3)
What is Arun's present value of starting work Immediately?
3,809,070
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