Since graduating, Janet has been working at a prestigious consulting company as an entry-level analyst with earnings of exactly $100,000 (let's say this includes benefits, bonuses, and is net of current cost of living). Janet has reached a point where she will not advance any further in the company without an MBA. Suppose for simplicity that without an MBA, she will earn $100,000 over the course of the next forty years until retiring at age 65. If she does choose to get an MBA, it will take her 2 years to earn the MBA, and her salary will be increased to $150,000 when she returns to the company. She has an offer from Columbia Business School in New York, where tuition and a high cost of living will cost roughly $100,000 per year. She cannot work while attending business school. Suppose that Janet will be able to take out an interest-free loan (or equivalently, that she is able to pay fully out of pocket).

1. Holding all other factors constant, determine whether the following modifications (each scenario0 would make Janet

more or less likely to get an MBA:

A) Changing the opportunity cost: Janet gets a raise at her current position.

B) Changing the direct cost: tuition increases at Columbia and cost of living rises in NYC.

C) Changing the time horizon: the retirement age at which Janet can claim maximal Social

Security benefits is increased.

D) Changing the discount rate: Janet's mother has been in poor health and having income today

to support her medical bills is of utmost importance.

E) Adding uncertainty: After getting an MBA, Janet has an equal chance of earning

$125,000 or $175,000 for the rest of her career.