Natalie is eighteen years old, and is about to finish her last year of high school. She is a very good student, and now has a choice of two prestigious university programs. The first choice is an engineering program at a Canadian university, which takes four years to complete and costs $80,000 in total (in present value term).When she graduates

(i.e., at age twenty-two), she expects her starting salary to be $70,000 per year (payable at the end of the year). The salary will grow at the rate of gw = 5% p.a. The second choice is a medical program at an American university, which takes seven years to complete and costs $200,000 in total (in present value term). When she graduates, her starting salary is expected to be $100,000 per year (payable at the end of the year). It is expected to grow at the rate of gw = 4% p.a.

Regardless of the choice, she plans to work until she reaches sixtyfive years old. Assume that the valuation rate is 4.50% p.a. Which program of study should she choose?