U.S. Census Bureau statistics show that the annual earnings for persons with a high school diploma are $35, 220 versus $57, 925 for someone with a bachelor’s degree. If the cost of attending college is assumed to be $35, 000 per year for 4 years and the forgone earnings during those years are assumed to be $35, 220 per year, what rate of return does earning a bachelor’s degree represent? Use a 25-year study period. In your analysis, you are expected to: (i) Use Excel to display the cash flow; (ii) Draw a Cash Flow Diagram; (iii) Use Excel to compute the internal rate of return of the CFD. (Hint: The investment in years 1 through 4 is the cost of college plus the foregone earnings, and the income in years 5 through 25 is the difference in income between a high school diploma and a bachelor’s degree.) Use excel
U.S. Census Bureau statistics show that the annual earnings for persons with a high school diploma are $35, 220 versus $57, 925 for someone with a bachelor’s degree. If the cost of attending college is assumed to be $35, 000 per year for 4 years and the forgone earnings during those years are assumed to be $35, 220 per year, what rate of return does earning a bachelor’s degree represent? Use a 25-year study period. In your analysis, you are expected to: (i) Use Excel to display the cash flow; (ii) Draw a Cash Flow Diagram; (iii) Use Excel to compute the internal rate of return of the CFD. (Hint: The investment in years 1 through 4 is the cost of college plus the foregone earnings, and the income in years 5 through 25 is the difference in income between a high school diploma and a bachelor’s degree.) Use excel
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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U.S. Census Bureau statistics show that the annual earnings for persons with a high
school diploma are $35, 220 versus $57, 925 for someone with a bachelor’s degree. If the cost of
attending college is assumed to be $35, 000 per year for 4 years and the forgone earnings during
those years are assumed to be $35, 220 per year, what rate of return does earning a bachelor’s degree
represent? Use a 25-year study period. In your analysis, you are expected to: (i) Use Excel to
display the cash flow; (ii) Draw a Cash Flow Diagram; (iii) Use Excel to compute the internal rate
of return of the CFD. (Hint: The investment in years 1 through 4 is the cost of college plus the
foregone earnings, and the income in years 5 through 25 is the difference in income between a high
school diploma and a bachelor’s degree.)
Use excel
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