A. Set up but do not solve. Suppose that a worker is 2 decades away from...

 

Transcribed Image Text:

A. Set up but do not solve. Suppose that a worker is 2 decades away from retirement and is considering migrating to a new city a very long way away. In decade 1, the worker could earn $700,000 at their new job or $750,000 at their current job. In decade 2, the worker could earn $800,000 at their new job or $750,000 at their current job. Assume the interest rate is 20%. The monetary cost of moving is $15,000 in decade 1 and $5,000 in decade 2. The psychic cost of moving is $5,000. Please set this up with the equation like we did in class for the present value of net benefits of migration, but do not solve. (4 points) B. If (hypothetically) the present value of net benefits of migration was $50,000.00, would the person decide to move? Explain. (2 points) A. Set up but do not solve. Suppose that a worker is 2 decades away from retirement and is considering migrating to a new city a very long way away. In decade 1, the worker could earn $700,000 at their new job or $750,000 at their current job. In decade 2, the worker could earn $800,000 at their new job or $750,000 at their current job. Assume the interest rate is 20%. The monetary cost of moving is $15,000 in decade 1 and $5,000 in decade 2. The psychic cost of moving is $5,000. Please set this up with the equation like we did in class for the present value of net benefits of migration, but do not solve. (4 points) B. If (hypothetically) the present value of net benefits of migration was $50,000.00, would the person decide to move? Explain. (2 points)

Answer rating: 100% (QA)

Step 1 Calculate the present value of earnings if the worker stays at their current job PV1... View the full answer