Suppose that, at age 30, you might wish to leave your job and pursue a masters degree.
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Question:
Suppose that, at age 30, you might wish to leave your job and pursue a master’s degree. If you choose to remain at your job, your employer would pay you $74k per year until retirement, at age 55. If you go back to the university, you would have to sacrifice 2 years of income, but once you graduate, you would receive $115k per year until you retire at age 55. The master’s program you are interested in costs $22k per year.
The term “k” is used to represent thousands (× $1,000).
Required:
At an opportunity cost of 7%, determine the percentage difference between your most and least profitable alternatives, with the least profitable option as the basis for your calculation.
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