Write out first five elements of relevant stream of values

Assignment Help Econometrics
Reference no: EM13213797

Consider an individual aged 22 who is completing a bachelor's degree and is trying to decide whether to continue his education for an additional two years in order to obtain a Master's degree. Expected working life is through age 64. Age 23-24 earns $35,000 for bachelors and a masters degree is not applicable Age 25-29 earns $40,000 for bachelors and $48,000 for a masters degree Age 30-34 earns $44,000 for bachelors and $56,000 for a masters degree Suppose further that tuition and fees for the Master's program amounted to $19,000 per year, and books cost $1,000 per year. In addition, assume that there is an annual subsidy to the student provided through state funding in the amount of $10,000 (that is, this is part of the total cost of educating the student, but is not included in the tuition cost or any other cost paid by the student). Assume that you are using the net present value approach to evaluate the investment, with a 10% interest rate as your discount rate. What is the required condition for this investment to be desirable, given the discount rate? Write out the first five elements of the relevant stream of values to be calculated in order to assess the net present value of the investment from the private (the individual's) perspective. That is, for an investment beginning at age 23 and continuing through age 64, there will be 42 elements in the stream of values to be discounted. You need to identify the first five of these elements. Note that you do not need to calculate the exact discounted values involved, but you do need to write down the numbers (separate ones for the numerator and the denominator) that would be used to calculate the present discounted value for each of the five elements.

Reference no: EM13213797

Questions Cloud

What pathway is at play when evaluating a condition : For example the Mexico's oportunidades program where large cash transfers were given to poor mothers conditional on preventive health care and child school enrollment. What is it at play here - behavioural economics or neoclassical
Depict the three different isomers : Draw the three different isomers according to the number of C atoms in their main chain.
Britain hoped for british alliance with texas : Some people in Britain hoped for British alliance with Texas because
Comparisons of the house and senate : Which of the following comparisons of the House and Senate is true?
Write out first five elements of relevant stream of values : In addition, assume that there is an annual subsidy to the student provided through state funding in the amount of $10,000 (that is, this is part of the total cost of educating the student, but is not included in the tuition cost or any other cost..
Explain how many milliliters of h2so4 are required to react : How many milliliters of 5.40 M H2SO4 are required to react with 4.00 g of solid containing 50.0 wt% Ba(NO3)2 if the reaction is as shown?
Compared to the use of fossil fuels-wind energy : The function of the water that surrounds the nuclear fuel in the reactor core is to, All of the following would contribute to declines in fertility rates EXCEPT, Compared to the use of fossil fuels, wind energy
Describe how people can identify their federal tax brackets : Explain which account would earn more money for the investor: a traditional IRA or a Roth IRA. Support your statements with reasons and examples and describe how people can identify their federal tax brackets.
Explain what was the percentage by mass of k2so3 : The titration required 10.51 mL of the KOH solution to reach an end point. What was the percentage by mass of K2SO3 in the original mixture of KNO3 and K2SO3?

Reviews

Write a Review

Econometrics Questions & Answers

  Equation for the monopolist''s marginal revenue funtion

A monopolist's inverse demand function is P = 150 - 3Q. The company produces output at two facilities; the marginal cost of producing at facility 1 is MC1(Q1) = 6Q1, and the marginal cost of producing at facility 2 is MC2(Q2) = 2Q2. Provide the eq..

  How many units will the consumer buy in total

Suppose that individual demand for a product is given by QD = 1000 - 5P. Marginal revenue is MR = 200 - 0.4Q, and marginal cost is constant at $20. There are no fixed cost. A. The firm is considering a quantity discount. The $120, and further units..

  Calculate the total change in money supply

One alternative way (from the formula on p. 419) to calculate the total change in money supply when the Fed injects money into the economy or takes away money from the economy is the amount of money injected or taken away by the Fed times the mone..

  What price does this firm charge its customers

A firm has $1,100,000 in sales, a Lerner index of 0.62, and a marginal cost of $55, and competes against 1000 other firms in its relevant market. Instruction: Round your answers to 2 decimal places.

  What is the smallest the price can be for the firm

Suppose you are the manager of a watchmaking rm operating in a competitive market. Your cost of production is given by C = 200+2q2, where q is the level of output and C is total cost. (The marginal cost of production is 4q; the xed cost is $200.)

  What is the value of the deadweight loss created

Suppose a monopolist faces the following demand curve: P = 140 - 6Q. Marginal cost of production is constant and equal to $20, and there are no fixed costs. a)  What is the monopolist's profit maximizing level of output

  How many watts/square meter does it represent

If 12 percent of thoes solar energy resources could be harnessed , how long would it take for an average 50 square meter solar array to fill up a car with the energu equivalent of 15 gallon thank of fasoline

  Why is advertising prevalent in many oligopolies

Illustrate your answer by assuming that with advertising, a firm's demand curve has price elasticity of -1.5 and without advertising, it is -2. If MC is $10, what is the difference in the profit-maximizing price.

  Question about price ceiling

Acme Water is a privately owned firm that is sole supplier of water to a rural town in Pennsylvania. The owner of company has provided the manager of firm an incentive to maximize company's profits,

  Who was charging the monopoly price per beer

Illustrate that the previous manager, who was charging the monopoly price per beer, was not maximizing profits as accused by the owner. That is, find an alternate pricing scheme that results in more profits per customer than the monopoly scenario.

  What is the minimum amount person three is willing to pay

The marginal cost of providing 25 neighborhood street lamps is $2000. There are 3 people living in the neighborhood. Person 1 is willing to pay $800 for the 25 lamps and person 2 is willing to pay $300 for the 25 street lamps.

  Determine what percentage of retail jobs would be lost

Joe Sabia, an assistant professor of public policy at American University in Washington, D.C., says that a 10 percent increase in minimum wage reduces retail employment by 1 percent and reduces employment among young workers by 3.4 percent.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd