Suppose an individual with a high school degree lives for only two periods and fac two schooling options. He can choose not to attend college, in which case he earr $10,000 in each period. He can also choose to go to college in the first period, incu out-of-pocket costs of $2,000, and enter the labor market in the second period, earning $30,000. a) Suppose the individual's discount rate is 0.05. What is the present value of not going to college? Show your work.

Suppose an individual with a high school degree lives for only two periods and fac two schooling options. He can choose not to attend college, in which case he earr $10,000 in each period. He can also choose to go to college in the first period, incu out-of-pocket costs of $2,000, and enter the labor market in the second period, earning $30,000. a) Suppose the individual's discount rate is 0.05. What is the present value of not going to college? Show your work.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter17: Income, Poverty, And Health Care

Section: Chapter Questions

Problem 11P

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