1. John is trying to decide if he should attend college or not. Part of his decision will be based on the return on investment of college. | a. He estimates that the per year cost to attend Texas Tech including room and board is $24,044 per year. He also assumes costs will rise by 6% per year. How much is a 4-year degree going to cost John? N I/Y PV PMT FV b. John recognizes that not only will he have the costs of attending school, but he will also be giving up a salary while he attends school. He figures the average salary for those with only a high school diploma is $33.176. He assumes he would receive a 3% cost of living raise each year. Determine how much money he will forgo while attending school. N I/Y PV PMT FV c. If John adds the cost of college with the salary he will forgo by attending college he finds it will cost: in total. (Keep in mind that this does not include any interest on loans needed to pay for school). d. Help John determine if it really is worth it to get a college education by comparing his ROI going to college and his ROI not going to college. After some research John discovers that for his career choice over the next 20 years he can expect to earn $1.6 million with a degree and $809,000 without one. What is John's additional benefit (ROI) from going to college? Determine this ROI 20 years after he finishes college. N I/Y PV PMT FV e. Is this a good ROI or not? List at least 3 other factors besides ROI that John should consider. 1. 2. 3. 1. John is trying to decide if he should attend college or not. Part of his decision will be based on the return on investment of college. | a. He estimates that the per year cost to attend Texas Tech including room and board is $24,044 per year. He also assumes costs will rise by 6% per year. How much is a 4-year degree going to cost John? N I/Y PV PMT FV b. John recognizes that not only will he have the costs of attending school, but he will also be giving up a salary while he attends school. He figures the average salary for those with only a high school diploma is $33.176. He assumes he would receive a 3% cost of living raise each year. Determine how much money he will forgo while attending school. N I/Y PV PMT FV c. If John adds the cost of college with the salary he will forgo by attending college he finds it will cost: in total. (Keep in mind that this does not include any interest on loans needed to pay for school). d. Help John determine if it really is worth it to get a college education by comparing his ROI going to college and his ROI not going to college. After some research John discovers that for his career choice over the next 20 years he can expect to earn $1.6 million with a degree and $809,000 without one. What is John's additional benefit (ROI) from going to college? Determine this ROI 20 years after he finishes college. N I/Y PV PMT FV e. Is this a good ROI or not? List at least 3 other factors besides ROI that John should consider. 1. 2. 3
