Suppose a college education raises a person's wage by$30,000 per year, from$40,000 to$70,000. Assume the interest rate is 3%, there is no growth in wages, and the retirement age is 60, then answer the following.

(a) Suppose you are a high school senior of age 18 deciding whether or not to go to college. What is the present discounted value of your labor income if you forgo college and start work immediately?

(b) As an alternative, you could pay$20,000 per year in college tuition, attend for 4 years, and then earn$70,000 per year after you graduate. What is the present discounted value of your labor earnings under this plan? (Compute this value from the point of view of a high school senior at age 18.)