Suppose that you are considering whether to enroll in a summer computer-training program that costs $1,500. If you take the program, you will have to give up $750 of earnings from your summer job. You figure that the program will increase your earnings by $250 per year for each of the next 10 years. Beyond that, it is not expected to affect your earnings. Suppose the interest rate is 6%, Use the preceding information to calculate the present value of the wage increase resulting from the training program. Then decide whether the investment is worthwhile, given the present value of the cost of the training program. At this interest rate, the present value of the increase in wages is about of the training. Thus, from a strictly monetary viewpoint, you than the present value of the total cost which is Surticipate in the training program.
Suppose that you are considering whether to enroll in a summer computer-training program that costs $1,500. If you take the program, you will have to give up $750 of earnings from your summer job. You figure that the program will increase your earnings by $250 per year for each of the next 10 years. Beyond that, it is not expected to affect your earnings. Suppose the interest rate is 6%, Use the preceding information to calculate the present value of the wage increase resulting from the training program. Then decide whether the investment is worthwhile, given the present value of the cost of the training program. At this interest rate, the present value of the increase in wages is about of the training. Thus, from a strictly monetary viewpoint, you than the present value of the total cost which is Surticipate in the training program.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
#4
Transcribed Image Text:8. Critical analysis Q14
Suppose that you are considering whether to enroll in a summer computer-training program that costs $1,500. If you take the program, you will have
to give up $750 of earnings from your summer job. You figure that the program will increase your earnings by $250 per year for each of the next 10
years. Beyond that, it is not expected to affect your earnings. Suppose the interest rate is 6%.
Use the preceding information to calculate the present value of the wage increase resulting from the training program. Then decide whether the
investment is worthwhile, given the present value of the cost of the training program.
At this interest rate, the present value of the increase in wages is about
of the training. Thus, from a strictly monetary viewpoint, you
which is
purticipate in the training program.
F
than the present value of the total cost
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education