Instead completing one-year Master program

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Question

Consider a worker who is planning to retire five years from now and is thinking about not working for the next year and instead completing a one-year Master's program. If they do not complete the program, they will earn $C one year from now, $C two years from now, and so on through five years from now. If they complete the program, they will pay $A one year from now and then earn $B each of the subsequent four years. Assume the worker's only concern is their financial well-being. Explain why it would be a mistake for the worker to decide whether to enroll in the Master's program by comparing 4•$B - $A and 5•$C. What calculation should the worker do instead?

Reference no: EM134040002

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