Suppose an individual can decide between two careers: (1) asurgeon and (2) a business analyst. Salaries for four periods adisplayed in the table below.OCCUPATIONSurgeonPeriod 0-$40Business Analyst -$10Period 1$100$41SALARYPeriod 2$115$43Period 3$300$45(Questions)(a) Assume the individual's discount factor is 0.90. Calculatethe net present value of becoming a surgeon. Show all steps toyour work.(b) Again, assume the individual's discount factor is 0.90.However, this time, calculate the net present value of becominga business analyst. Show all steps to your work.(c) For which occupation did the individual have a higher netpresent value (NPV)? Based on this information, discusspotential intrinsic characteristics that this person might have?(d) Explain why a large internal rate of return for an occupation,such as being a surgeon, can persist over a long period of time.

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Suppose an individual can decide between two careers: (1) a surgeon and (2) a business analyst. Salaries for four periods a displayed in the table below. OCCUPATION Period 0 -$40 Surgeon Business Analyst -$10 Period 1 $100 $41 SALARY Period 2 $115 $43 Period 3 $300 $45 (Questions) (a) Assume the individual's discount factor is 0.90. Calculate the net present value of becoming a surgeon. Show all steps to your work.

Suppose an individual can decide between two careers: (1) a surgeon and (2) a business analyst. Salaries for four periods a displayed in the table below. OCCUPATION Period 0 -$40 Surgeon Business Analyst -$10 Period 1 $100 $41 SALARY Period 2 $115 $43 Period 3 $300 $45 (Questions) (a) Assume the individual's discount factor is 0.90. Calculate the net present value of becoming a surgeon. Show all steps to your work.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose an individual can decide between two careers: (1) a
surgeon and (2) a business analyst. Salaries for four periods a
displayed in the table below.
OCCUPATION
Surgeon
Period 0
-$40
Business Analyst -$10
Period 1
$100
$41
SALARY
Period 2
$115
$43
Period 3
$300
$45
(Questions)
(a) Assume the individual's discount factor is 0.90. Calculate
the net present value of becoming a surgeon. Show all steps to
your work.
(b) Again, assume the individual's discount factor is 0.90.
However, this time, calculate the net present value of becoming
a business analyst. Show all steps to your work.
(c) For which occupation did the individual have a higher net
present value (NPV)? Based on this information, discuss
potential intrinsic characteristics that this person might have?
(d) Explain why a large internal rate of return for an occupation,
such as being a surgeon, can persist over a long period of time.

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