19-2

2. Individual Problems 19-2 Many police officer positions require the applicant to have a college degree, even though the tasks of a police officer rarely call upon college course material. Suppose two individuals who do not have college degrees are considering applying to the police force. Gilberto is considering applying for an officer position and plans on working for the police force for a period of time, over which he would earn approximately $650,000 (in present discounted value) in earnings while in the position. Kenji is also considering applying, and plans on working as an officer for a period of time, over which he would earn approximately $2,000 (in present discounted value) in lifetime earnings while in the position. Also suppose that present value of obtaining a college degree, which is required to submit a job application to the police department, is $50,000. Use the following table to indicate whether each individual would likely apply, or not, given the cost of obtaining a college degree. Buyer Would Apply Would Not Apply Gilberto Kenji C