Consider an individual aged 22 who is completing a bachelor Solution Age bachelo
ID: 1243012 • Letter: C
Question
Consider an individual aged 22 who is completing a bachelorExplanation / Answer
Age bachelor’s Master’s 23-24 $35,000 -- 25-29 40,000 $48,000 30-34 44,000 56,000 Difference: Age 23-24 -$45000, 25-29 +$8000, 30-34 +$12000, Let 35-65 be X Then NPV = 0 =>((-45000)/(1.1^1))+((-45000)/(1.1^2))+((8000)/(1.1^3))+((8000)/(1.1^4))+((8000)/(1.1^5))+((8000)/(1.1^6))+((8000)/(1.1^7))+((12000)/(1.1^8))+((12000)/(1.1^9))+((12000)/(1.1^10))+((12000)/(1.1^11))+((12000)/(1.1^12))+X*((1/(1.1^13))+(1/(1.1^14))+(1/(1.1^15))+(1/(1.1^16))+(1/(1.1^17))+(1/(1.1^18))+(1/(1.1^19))+(1/(1.1^20))+(1/(1.1^21))+(1/(1.1^22))+(1/(1.1^23))+(1/(1.1^24))+(1/(1.1^25))+(1/(1.1^26))+(1/(1.1^27))+(1/(1.1^28))+(1/(1.1^29))+(1/(1.1^30))+(1/(1.1^31))) = 0 =>X = $11,140.437 So The difference in salary between Bachelor's and master's from 35-65 should be $11,140.437