Scenario 2

Jamie is about to choose a career path. She has narrowed her options to two alternatives: Career Path A or Career Path B. Suppose we model Jamie's life using a two-period model. In the first, she pays to receive an education and does not work during this time. In the second period, she works and receives an income. Suppose her rate of discount is 5%.

Refer to Scenario 2.

If Jamie goes with Career Path A, suppose she spends $17,861 on education in the first period and earns $496,844 in the second period. What is Jamie's present value of choosing Career Path A?

Refer to Scenario 2.

If Jamie chooses Career Path B, she will spend $36,159 on education in the first period and then earn $528,066 in the second period. What is the present value of Jamie choosing Career Path B?