Theodore is considering a 1-year training program, which charges $20,000 in tuition, to learn how to install airport screening equipment. If he enrolls in the program, his opportunity cost in forgone income is the $100,000 per year he can now earn. After completing the program, he is promised a job for 5 years, with a yearly salary of $130,000. (After 5 years, the equipment is expected to be obsolete, but Theodore plans to retire at that time anyway.) Assume Theodore's personal discount rate is 5 percent. Should Theodore enroll in the program? Why? (Show your

Theodore is considering a 1-year training program, which charges $20,000 in tuition, to learn how to install airport screening equipment. If he enrolls in the program, his opportunity cost in forgone income is the $100,000 per year he can now earn. After completing the program, he is promised a job for 5 years, with a yearly salary of $130,000. (After 5 years, the equipment is expected to be obsolete, but Theodore plans to retire at that time anyway.) Assume Theodore's personal discount rate is 5 percent. Should Theodore enroll in the program? Why? (Show your

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

Theodore is considering a 1-year training program, which charges $20,000 in tuition, to learn how to install airport
screening equipment. If he enrolls in the program, his opportunity cost in forgone income is the $100,000 per year he
can now earn. After completing the program, he is promised a job for 5 years, with a yearly salary of $130,000. (After 5
years, the equipment is expected to be obsolete, but Theodore plans to retire at that time anyway.) Assume
Theodore's personal discount rate is 5 percent. Should Theodore enroll in the program? Why? (Show your
calculations.)

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