Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
Part 2: Is this Investment in Human Capital Worthwhile? Goober is now working in a job that pays $9.000 per year. He is contemplating a
Part 2: Is this Investment in Human Capital Worthwhile? Goober is now working in a job that pays $9.000 per year. He is contemplating a one-year automobile mechanics course that costs $1,000 for books and tuition, payable right now. He will be unable to work while he takes the course. Goober estimates that the course will increase his income by $5,000 in each of the three years after he completes the course. After three years he is expecting a huge inheritance and will not need to work for the rest of his life. The current interest rate is 5%. Using the human capital investment model, determine whether this investment is worth it to Goober. (Hint: determine the present discounted value of the stream of earnings and compare it to the costs of the education, both direct and indirect.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started