Following the data depicted in Table 21.1, suppose that the average male high school graduate earns about $4,000 per year more (after taxes) from age 21 to 24 than does the man who did not earnthe high school diploma. Hethen earns $9,000 (aftertaxes) per year more from age 25 to retirement (approximately an infinite time horizon). Assume to graduate from high school the person must forgo earnings of $15,000 per year for two years (everyone attends fortwo years, up to age 16). High school charges no tuitiontothe student but coststhetaxpayers $7,000 per year per student. Assume a discount rate of 5%.

a. Is earning a high school diploma a good investment for the individual? What are the present value of benefits and costs, dating your calculations at the beginning of the third year of high school?

b. Is having the person complete high school a good investment for society?