Explicit cost of attending the training program

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Reference no: EM131451941

You are deciding whether or not to go to attend a training program. The training program lasts two years, and costs $15,000 per year, and tuition is due at the beginning of the year. If you don’t attend the training program, you could work and earn a wage of $50,000 per year, which would be paid at the beginning of the year, for the next six years, after which you would retire. If you attend the training program, you don’t work for the next two years, but would earn $80,000 per year for the following four years, paid at the beginning of the year, after which you would retire. The interest rate is 10%.

a) What is the present value of the explicit cost of attending the training program?

b) What is the present value of the implicit cost of attending the training program?

c) What is the present value of the extra income received during the four years of working if you attend the training versus not attending? (hint: your income grows by $30,000/yr for four years)

d) Should you attend this program?

Reference no: EM131451941

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