Question
Consider a model with two periodsthe first time period is the four years after high school and the second time period is the next 40
Consider a model with two periodsthe first time period is the four years after high school and the second time period is the next 40 years. A person without a college education receives $120,000 of income during the first period and $1.2 million of income during the second period. A college graduate pays $200,000 during the first period to obtain a college degree and forgoes all earnings but then earns $2 million of income during the second period. Will the individual work or go to college in the first period if her individual rate of return between the two periods is 40%? Show your calculations.
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