You are a college sophomore who tutors fellow classmates in your free time for extra money. With your current abilities, you can earn $2,000 per year for the next three years from tutoring. However, suppose you have the option of enhancing your ability to tutor by acquiring special training for $6,000. After paying the fee, the training takes two years to complete, but at the end of this training period, you can earn $13,000 tutoring during the third year. While training in your free time, you are unable to continue tutoring. At what discount rate would you be indifferent between acquiring and not acquiring the training? You would be indifferent if the discount rate were percent. (Enter a numeric response rounded to two decimal places.)

You are a college sophomore who tutors fellow classmates in your free time for extra money. With your current abilities, you can earn $2,000 per year for the next three years from tutoring. However, suppose you have the option of enhancing your ability to tutor by acquiring special training for $6,000. After paying the fee, the training takes two years to complete, but at the end of this training period, you can earn $13,000 tutoring during the third year. While training in your free time, you are unable to continue tutoring. At what discount rate would you be indifferent between acquiring and not acquiring the training? You would be indifferent if the discount rate were percent. (Enter a numeric response rounded to two decimal places.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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