Josh just turned 20years old and works as a plumber. He considers taking a 1-year specialized degree in plumbing. The course costs $8,000. He is currently working and earning $40,000 per year as a plumber for a small company. However, he is afraid a recession will start in which the small company will close down, and he would lose his job. He would be unemployed (no unemployment benefits) for 1 year but expects to find another job which pays him the same after that ($40,000 per year). However, as a master plumber he would earn $10,000 more per year and he would easily find a job, even in case of a recession. He believes that a recession will hit the country in 2 years from now (at age 22), with a probability of 50%. (And for simplicity, if not then, it wont happen before he turns age 28).

The market rate of interest is 5% and Josh intends to go travelling when he turns 28(years). At this point, he does not care at all about what happens after that (i.e. his discount rate for that period is infinity). What would you advise Josh: should he take the specialized degree or not?

fill up the table(show working step)

			Discounted Income Streams
			No Degree		Specialist degree
Year	Discount factor	Age	no recession	recession
1	1.05	20
2		21
3		22
4		23
5		24
6		25
7		26
8		27