Posted: November 14th, 2024
Imagine Roger is contemplating going school to complete a Masters degree
Imagine Roger is contemplating going school to complete a Masters degree in the current period while working part-time instead of full time. There are six relevant periods of his work life, periods t = 0, 1, 2â¦5. His earnings each period if he gets the additional education are given byYt = 100 + 200tIf he doesnât get the education his earnings are given byYt = 200 + 150tImagine that Roger shares the discount rate of the economy as given by the interest rate of .1.a. Is the education a good investment? Show work.b. If Jane faces the same choice but has a discount rate of .25, is the education a good investment for her?c. What behavioral factors might indicate Janeâs higher discount rate?d. What is the approximate internal rate of return for the investment in education indicated in this problem?
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