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(Comprehensive Problem) Suppose that you are in the fal of your senior year and are tacod with the choice of either getting a job when

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(Comprehensive Problem) Suppose that you are in the fal of your senior year and are tacod with the choice of either getting a job when you graduato or going to law school. Of course, your choce is not purely financial. However, to make an informed deosion you would like to know the financial implicatons of the two altematives. Lefs assume that your altematives are as follows: If you take the "get a job" roste you expect to start off with a salary of $40,000 per year. There is no way to prodict what will happen in the future, your best guess is that your salary will grow at 5 percent per year until you retire in 42 yeas. As a law student, you wal be paying $20,000 per year tuition for each of the 3 years you are in graduate school. However, you can then expect a job with a starting satary of $70,000 per year. Moreover, you expect your salary to grow by 9 percent per year until you retire 36 years latec. Clearly, your total enpected lifetire salary wil be highe if you become a lawyer. However, the additional Nuture salary is not tree. You will be paying $20,000 in tuition at the beginning of each of the the third year 2. To stan your analysis of whether to go to iaw school, calculate the present value of the future eamings that you wil realce by going directly to work, assume a discount rate of 10 percent. b. What is the present value today of your tuture eanings if you decide to atiend law school, assuming a discount rate of 10 percent? Fiemember that you wif be in lare school for 3 years before you start to work as a lawec. Ofint assume that you are paid at the end of each year so thut your first salary payment if you decide to go to law school occurs 4 years from now) c. If you pay your law school tuition at the begining of each year, what is the present value of your tution, assuming a discount rate of 10 percen?? 2. What is the pesent value of the future earnings that you will resize by going drecty to work astuming a discount rate of 10 percen? (Round to the neavest cent)

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