Let us explore the net present value or internal rate of return model for career choice discussed in class and in BHT Chapter 5.

Consider someone choosing between career paths with the following time path of income payoffs: Professional skier a) [3 points] If 6 , the periodic discount factor, equals 1, and we are not discounting the lture at all relative to the present, what is the net present value for each career choice? Which career will you choose if you are choosing solely based on income? (Note that income ows are discounted by 6' where t indexes the period. Thus ows in period t = 0 are not discounted at all.) Answers i1 unit get full credit