You're deciding whether to pursue a Master's degree in Economics. With your Bachelor's degree, you'll earn $105,800 per year, but with a Master's degree, you'd earn $134,000 annually. The upfront cost of acquiring a Master's degree is $35,000 in tuition. The real interest rate is 2%. What is the next thing you should do to evaluate your decision? Compare the present value of benefits to the future value of costs. Determine the depreciation rate of your degree. Adjust the real interest rate to lower your opportunity cost. Use the nominal interest rate instead for a more accurate calculation.

You're deciding whether to pursue a Master's degree in Economics. With your Bachelor's degree, you'll earn $105,800 per year, but with a Master's degree, you'd earn $134,000 annually. The upfront cost of acquiring a Master's degree is $35,000 in tuition. The real interest rate is 2%. What is the next thing you should do to evaluate your decision? Compare the present value of benefits to the future value of costs. Determine the depreciation rate of your degree. Adjust the real interest rate to lower your opportunity cost. Use the nominal interest rate instead for a more accurate calculation.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter5: Consumer Choice: Individual And Market Demand

Section: Chapter Questions

Problem 5DQ

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