1. Terry is considering attending the Culinary Institute ofAmerica in New York City. It is a four-year program with tuitioncosts of $29,380 per year. He currently makes $55,000 per year as asous chef, which he would have to forgo if he attends culinaryschool. He plans to work for 30 more years (or 26 after 4 years ofculinary school if he decides to attend). He predicts that afterschool, he could start his own restaurant and earn $85,000 peryear. Assume he likes learning so that his psychic costs are zero.Also assume all of the costs and benefits occur at the end of eachyear, starting one year from now.

Assume he has a discount rate of 5%. What are his discountedearnings over the next 30 years if he decides not to go toschool?

Answer rating: 100% (QA)

Answer To calculate Terrys discounted earnings over the next 30 years i... View the full answer