3. Brea, who has just finished high school at age 18, has received a job offer that pays $33,600 per year during the first 4 years, $45,600 for the following five years and $48,000 each year thereafter until she retires at age 64. On the other hand, she can attend college for four years and study economics at a cost of $18,000 per year in tuition, fees, and books. There is no difference in her living expenses if she chooses to go to college. If she successfully finishes school and finds a job as an economist her yearly earnings will be $67,200 for the first five years and $79,800 each year thereafter until she retires at age 65. On the other hand, she might fail out after two years, in which case her earnings will be the same as if she never went to college. (Hint: Excel is your friend. Since she is 18, whatever she does immediately school or go to work occurs immediately today.) (15 points) a. If Brea believes there is no chance she will fail out of college, will she decide to attend? Assume no psychological costs (i.e., Brea's disutility from learning is the same as her disutility of work) are involved and the market rate of interest is 5%. Show all of your work. b. If Brea believes she will drop out of college after completing two years, what would be her NPV of expenditures and earnings? Assume no psychological costs (i.e., Brea's disutility from learning is the same as her disutility of work) are involved and the market rate of interest is 5%. Show all of your work. c. How high or low does the interest rate need to be for Brea to reverse her decision? (At approximately what interest rate (you can use whole number, ie. 1%, 2%, etc. rather than 1.2%) would she be indifferent between college and immediately working?) EXTRA CREDIT: If Brea thinks she has a75% chance of dropping out after completing two years and, therefore, a 25% chance of completing the degree, what would be the expected value of her NPV of the NPV of expenditures and earnings?