Continue studying or to take job directly after his bachelor

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Reference no: EM131571226

Ralph lives in US and is considering whether to continue studying or to take a job directly after his bachelor. If he continues with his studies, it will cost him 15 000 a year tuition, but then he can earn 60000 a year for the rest of his life. If he instead gets a job right away, he will earn 30000 a year for the first 3 years, a 45000 a year for the next 3 years and then he can earn 60000 a year for the rest of his life.

A) If his discount rate is 10% would it be good investment for him to continue his studies? (Hint: Since after 6 years he will earn the same whether he continues studying or not, you can simply compare the value of the first 6 years.)

Reference no: EM131571226

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