The income of college graduates is 50,000 before tax and 45,000 after tax Secondary school graduates earn 40,000 in before tax and 35,000 after tax. College graduates spent 3 years in college and did not work for this period. The private costs of going to college are 10,000 in total after any subsidies from the government. The students receive 3,000 in back to education subsidies from the government. There are positive externalities from college education of 3,000. Estimate the private rate of return on education.

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
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The income of college graduates is 50,000 before tax and 45,000 after tax Secondary school graduates earn 40,000 in before tax and 35,000 after tax. College graduates spent 3 years in college and did not work for this period. The private costs of going to college are 10,000 in total after any subsidies from the government. The students receive 3,000 in back to education subsidies from the government. There are positive externalities from college education of 3,000.

Estimate the private rate of return on education.

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