Suppose you are about to finish undergraduate degree in Economics, and are considering whether you should go to graduate school and if so whether you should get an MBA or a Master's in Social Work(MSW). The tuition fees for the MBA program are $100,000, and for the MSW program these fees are $75,000. However, there is an additional cost (psychic and other) of $100,000 associated with doing as MBA. The annual earnings difference between an MBA and a College graduate is $50,000, and between a MSW and a College graduate is $25,000. Suppose you have a discount rate of 30% and that you expect to live forever.

(a) Compute the internal rates of return to an MBA and MSW, respectively.

(b) If you decide to go to graduate school will you get an MBA or MSW?

(c) Will you attend graduate school at all?

(d) What if your individual discount rate was 40%?