(Relevant costs) Assume that you are about to graduate from your university.

You are trying to decide whether to apply for graduate school or enter the job market. To help make the decision you have gathered the following data:

Costs incurred for the bachelor’s degree $83,000 Out-of-pocket costs for the master’s degree $51,000 Estimated starting salary with B.A. $38,300 Estimated starting salary with M.A. $44,400 Estimated time to complete master’s degree 2 years Estimated time from the present to retirement 40 years

a. Which of these factors are relevant to your decision?

b. What is the opportunity cost associated with earning the master’s degree?

What is the out-of-pocket cost to obtain the master’s degree?

c. What other factors should you consider before making a decision?