Theodore is considering a 1-year training program, which charges $20,000 in tuition, to learn how to install airport-scr

Post by **answerhappygod** » Wed Jul 06, 2022 5:59 am

Theodore is considering a 1-year training program, which charges$20,000 in tuition, to learn how to install airport-screeningequipment. If he enrolls in the program, his opportunity cost inforgone income is the $100,000 per year he can now earn. Aftercompleting the program, he is promised a job for 5 years, with ayearly salary of $130,000. (After 5 years, the equipment isexpected to be obsolete, but Theodore plans to retire at that timeanyway.) Assume Theodore’s personal discount rate is 5percent.
What is the total present value of Theodore's earnings ifTheodore does not enroll? You can assume he gets the first$100,000 in 1 year, the next $100,000 2 years from now, and so onuntil $100,000 six years from now. (If Theodore does not takethe 1 year program, he can work the full 6 years untilretirement.)