Question
DO NOT USE EXCEL use regular calculations and annuities and pls do not copy and paste from the other posts here. PLs explain each step.
DO NOT USE EXCEL use regular calculations and annuities and pls do not copy and paste from the other posts here. PLs explain each step. thank you
The Human Capital Model - Assume a high school graduate faces the following set of facts. If she goes to work immediately, she will earn $20,000 a year for the rest of her working life. If she earns a four-year college degree, she will earn $50,000 a year for the rest of her working life. College costs $30,000 a year. She has a discount rate of 5%. She plans to work until age 65 (47 years after graduating high school).
- () Compute the NPV of her income stream if she does not go to college.
- () Compute the NPV of her income stream if she earns a college degree.
- () Should she earn a college degree?
- () Would your answer change if the college premium were cut in half?
- () Would your answer change if college cost $100,000 a year?
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