Assume that the explicit cost of a college education was $40,000 ($10,000 a year for four years).
Fantastic news! We've Found the answer you've been seeking!
Question:
Assume that the explicit cost of a college education was $40,000 ($10,000 a year for four years).
Assume also that by choosing to go to college you have deliberately forgone $120,000 in potential
income.
Upon graduation you don't enter the labor force right away, instead you join the Peace Corps for four
years. After four years you accept a job that will pay you $25,000 a year with a 1.5% raise every year for
the next 5 years. Using the Net Present Value formula decide if you should have made the initial
investment in human capital with assumed interest rates of 1%, 3%, and 8%.
b) Using the assumptions in part (a) determine the Internal Rate of Return
Related Book For
Posted Date: