Customer Service Chat
Get quote & make Payment
Question 1, economics, Microeconomics
You are considering whether or not to go to graduate school. Well… there are many things to consider, of course, such as the type of job you would thus get, the opportunity to live in a city or town whose existence you might have disregarded entirely otherwise and, most importantly, the sheer and ecstatic joy of learning! (By now, you may be wondering what I am on and where you can get some – search no further than Durian, a pungent fruit available in Chinatowns across NYC). All right, all this is well and good, but there is also a monetary aspect… Financially, would it be a sound decision? Let’s see.
- The graduate program you are looking at lasts four years;
- The school forbids you to work during the time of the program (to leave all your time to studying), but they will give you 10 000$ a year to live on
- The program will allow you to get a job paying 70 000 a year when you get out.
- If you do not go to graduate school (assuming you are just graduating from college), you have a job lined up paying 45 000.
- Your discount rate is 10% (0.1).
a) Is this a good idea financially? That is, does the higher wage when you get out ever compensates for the lower income during grad school? If so, how many years must you work on the job after graduation in order to come up ahead? (don’t forget to discount the future!)
b) What if you have another option: A school that lends you the money, but promises a job at 90 000$ when you get out. Let’s say that the school lends you the 10 000$ a year instead, and that repayment is due whenever you want (say, within 20 years), but as soon as you graduate, the loan starts accruing interest at a rate of 10% a year (so you owe 40 000$ on the day of graduation, 44 000$ the next year if you don’t pay anything, etc.). In this case, how many years do you need at 90 000$ for you to come out ahead? If you do come start coming out ahead after a while, do you do so faster than at the free school?
c) We talked to some extent about the issue of debt peonage in class. Even if you come out ahead eventually with the deal in b), is it constraining in away in terms of life plans? If so how?
d) So far, I have assumed that you have all the information (job-wise, etc.) in advance and that you know the information for certain. Of course, life is not so simple and no job is ever entirely guaranteed… So in this case, on what would you base your decision (keeping it on financial considerations for now)? How solid of a basis do you feel this is? Does taking uncertainty into account change the assessment of whether you should take a loan to study or not? If so, how does it change it?
Posted Date: 3/8/2012 12:00:54 PM | Location : United States
Ask an Expert
Question 1, economics, Assignment Help, Ask Question on Question 1, economics, Get Answer, Expert's Help, Question 1, economics Discussions
Write discussion on Question 1, economics
Your posts are moderated
Write your message here..
Production theory and analysis in managerial economi, dicuss the relevance ...
dicuss the relevance of studing production theory and analysis inn your career as a student of manegerial economics
Determinants of quantity supplied of a good, Determinants of quantity suppl...
Determinants of quantity supplied of a good The quantity of supplied of a product is influenced by factors such as the market price of the commodity, prices of inputs, techno
Bureaucratic problems, BUREAUCRATIC PROBLEMS: Bureaucratic problems en...
BUREAUCRATIC PROBLEMS: Bureaucratic problems encountered as hurdles in the implementation of economic policies are listed below: • Low levels of efficiency, effectiveness,
Direction of trade, Direction of Trade: It is indicative of the struct...
Direction of Trade: It is indicative of the structure and level of economic development. As a country develops and its trade gets diversified, it has to seek new outlets for i
Duopoly, characteristic of duopoly
characteristic of duopoly
The demand for big macs, illustrate and explain the changing demand gor big...
illustrate and explain the changing demand gor big Mac using the indifference curves and budget line
Production, given P=120-Q TC=Q(to the power 2)+ 16 1-derive the total...
given P=120-Q TC=Q(to the power 2)+ 16 1-derive the total revenue function 2-calculate profit mazimization output for a-perfect competitive firm b-monopoly 3-explain whi
Edgeworth model, edge worth model
edge worth model
Good governance to ensure implementation of economic policy, GOOD GOVERNAN...
GOOD GOVERNANCE TO ENSURE IMPLEMENTATION OF ECONOMIC POLICY: Government is very sensitive to the expectation of the people and sincere efforts in this direction have already
Accounting Assignment Help
Economics Assignment Help
Finance Assignment Help
Statistics Assignment Help
Physics Assignment Help
Chemistry Assignment Help
Math Assignment Help
Biology Assignment Help
English Assignment Help
Management Assignment Help
Engineering Assignment Help
Programming Assignment Help
Computer Science Assignment Help
IT Courses and Help
Why Us ?
~24x7 hrs Support
~Quality of Work
~Time on Delivery
~Privacy of Work
Human Resource Management
Literature Review Writing Help
Follow Us |
T & C
Copyright by ExpertsMind IT Educational Pvt. Ltd.