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Question 4. (15 points) Tom has just graduated from college and is deciding on a career. His three career options, along with his salary in

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Question 4. (15 points) Tom has just graduated from college and is deciding on a career. His three career options, along with his salary in each of the 3 earning periods, are displayed in the following table. Assume that each career only lasts 3 periods before retirement. Occupation Dentist Lawyer Soccer player Period 0 4 -2 8 Salary Period 1 6 7 3 Period 2 12 10 0 (a) What is the internal rate of return (IRR) for Tom to become a dentist as opposed to a lawyer? (b) What is the IRR for Tom to become a dentist as opposed to a soccer player? HEALTH ECONOMICS (ECON3004 / ECON8039) Page 3

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