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Unformatted text preview: high as possible, and she can borrow and lend at an interest rate of 5%. 1. If she doesnt go to grad school she can earn $30,000 a year for the next 45 years. What is the present value of this stream of income? (Hint: there's an easier way to compute this than adding up 45 payments.) 2. If she does go to grad school, she has to spend 3 years studying full time (that is, not working) and paying tuition of $20,000 a year. When she gets out, however, shell be able to earn $40,000 a year for 42 years. What is the present value of this part of the decision? 3. What decision should she make? Would your advice be the same if the interest rate were a lot higher?...
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This note was uploaded on 01/27/2011 for the course ECN 410 taught by Professor Laing,d during the Spring '08 term at Syracuse.
- Spring '08