Suppose that noncollege-graduates earn a salary of $25,000 per year in your hometown, and that salary will
Question:
Suppose that noncollege-graduates earn a salary of $25,000 per year in your hometown, and that salary will never change. If you go to college for four years, foregoing four years worth of that salary, but expect to work for 40 years until retirement after you graduate earning a different, higher, constant, "postcollege" salary, how much higher (per year, and to the closest dollar) must the "postcollege" salary be in order for the decision to attend college to be the financially preferred one? (Assume that your cost of capital is 6 percent; that you would have worked until the exact same retirement age if you hadn 't gone to college, and that all salaries are paid at the end of the year for simplicity.)
a. You must earn at least $2,273 more per year.
b. You must earn at least $7,269 more per year.
c. You must earn at least $9,328 more per year.
d. You must earn at least $32,269 more per year.
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