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Question 4: Consider a person trying to decide whether to get a job ater a i year college degree or contintne in college and receive
Question 4: Consider a person trying to decide whether to get a job ater a i year college degree or contintne in college and receive a PhD. If she gets a job after college, she expects to earn $50000 per year. However, if she decides to get a PhD, she expects to earn $75000 per year. You are not told how much a 4 year college costs (except that it is not zero). If she continues with a PhD she will receive a scholarship that should cover all her costs. Assume that the interest rate is 3% and she expects to work 45 years if she goes to a 4 year college, and 40 years if she gets a PhD. Caleulate and compare the net present discounted value of her wages based on the two options. The formula for the sum of a geometric series iswhere is a is the ratio, and n +1 is the number of years for which you are solving the
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