With one year of study, Rob Sanchez can earn a master's degree, which will cost him $15,000 in tuition and $20,000 in lost wages. The degree will increase his yearly income by $20,000 per year for three years after receiving the degree. The interest rate is 10 percent (0.10) per year. What should Rob do? (Assume that costs are incurred and income is received at the end of the year.)
a. he should obtain the degree because education always pays off
b. because the cost of tuition and lost wages ($35,000 . is less than the extra income ($60,000), he should obtain the degree
c. he should subtract the present value of tuition from the total present value of the additional income. If the number is positive, he should obtain the degree
d. he should subtract the total present value of the tuition and lost wages from the total present value of the additional income. If the number is positive, he should obtain the degree
e. he should subtract the present value of lost wages from the total present value of additional income. If the number is positive, he should obtain the degree
D
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Which of the following statements about utility and preferences is false?
A) If Sidra prefers tea to coffee and coffee to hot chocolate, then she must prefer tea to hot chocolate. B) If two individuals, Ingrid and Inez, each consume the same bundle of goods, then both Inez and Ingrid must receive the same utility from the bundle. C) Utility cannot be compared across consumers. D) Preferences can be ranked.
A call option is:
A. an option where all rights are granted to the seller of the option. B. an option giving the seller the right to sell a given quantity of an asset at a specific price on or before a specified date. C. any option written more than sixty days into the future. D. an option giving the holder the right to buy a given quantity of an asset at a specific price on or before a specified date.