--%>

Inter-temporal Costs and Benefits

Harvey is currently a Junior Analyst at a financial firm.  His annual salary is $30,000, and past experience leads him to believe that the real (inflation adjusted) value of his salary will remain at that level in the future.  (Assume he is paid at the end of the year.)  He aspires to work in office of the firms General Counsel, but to do so he is told he will need a JD. Further inquiries produce the following information:

• It would take three years of full-time study to obtain a JD, and the tuition and fees for each year (payable at the beginning of the year) are $20,000.

• He will need to resign his current position if he enters law school, but he can expect to earn $5,000 per year consulting on social policy issues, payable at the end of each of the three years.

• He is fortunate enough to live in the city in which the university providing the JD program is located, so he can keep his current housing arrangement.

• HE is 35 years old now; he would be 38 if he completes the JD program in timely fashion, and he anticipates working until he is 68.

• Discussions with students who have completed the JD program recently, and who have career interests similar to his lead Harvey to expect the following career profile after completion of the doctoral program at age 38:  Two years of employment as a Managing Director at an annual salary of $35,000 (payable at the end of the year), then at age 40, selection for the General Counsel’s office, at a salary of $55,000, keeping this salary (in constant dollars) until retirement.

• Harvey’s discount rate is three percent per year

Answer the following questions for Harvey:

a. Is it a good financial investment for me to get a JD? (Be sure to describe your answer in detail. Your answer should include a timeline and equations expressing the benefits and costs. If you use Excel to calculate the benefits and costs, please include the worksheet with your answers).

b. What if I wait five years before deciding whether to enter a JD program; how would this make any difference to the calculation of whether this is a good investment for me? (Make sure to indicate how this would alter either your benefit or cost equations; note that you do not need to redo calculations in (a) above)

   Related Questions in Microeconomics

  • Q : Economy-efficiency while transaction

    Transaction costs tend to be decreased, consumer prices tend to be lower and additionally stable and economy-wide efficiency is enhanced if: (1) rigid wage and price controls are imposed. (2) central planning fosters

  • Q : Analytic Time-The Market Immediate The

    The analytical period of time is very short that the firm could not adjust output by hiring more or less of a variable resource was recognized by Alfred Marshall as: (1) Immediate or market period. (2) Long run. (3) Short run. (4) Technological or temporal long run.

  • Q : Calculating economic profit Assume that

    Assume that you earn an annual salary of $25,000. You too have $10,000 in savings which earns $1,000 per year in interest. Now assume that you quit this job to open your own business and spend all your savings in the latest business. In the primary year, you take in r

  • Q : Help The problem of asymmetric

    The problem of asymmetric information is that

  • Q : Income Elasticities of Demand Question:

    Question: (a)  Suppose the income elasticity of demand for pre-recorded music compact disks is +4 and the income elasticity of demand for a cabinet maker's work is +0.4.  Compare the impact on pre-recorde

  • Q : Explain about Welfare Recipients When

    When the ratio of [tax burdens upon you] / [taxes upon all taxpayers] is less than the ratio [benefits to you by government programs] / [benefits of government programs realized through all residents of the country], in that case it seems reasonable to explain you as

  • Q : Government banks function Government

    Government banks function: The central bank conducts the banking account of the government departments. This performs similar banking functions for the government as commercial bank executes for its customers. This accepts their deposits and undertake

  • Q : Accumulation of Capital in Market

    The individuals who eventually enable accumulation of capital into a market economy are: (1) consumers. (2) firms. (3) government. (4) savers. (5) capitalists. How can I solve my Economics problem?

  • Q : Advantages of regional integration Give

    Give the basic advantages of regional integration?

  • Q : Estimation of total cost in specific

    Total cost can be estimated as area: (i) 0bcq1. (ii) 0adq2. (iii) 0Peq2. (iv) aPed. (v) Cannot be measured in illustrated figure. 22</span></p>
                                        </div>
                                        <!-- /comment-box -->
                                    </li>
   
   </td>
	</tr>
</table>



                                    
                                    
                                </ul>
                                <!-- /user-comments-list -->
                            </div>
                        </div>
                    <div  class=

    Discover Q & A

    Leading Solution Library
    Avail More Than 1450515 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads
    No hassle, Instant Access
    Start Discovering

    18,76,764

    1938286
    Asked

    3,689

    Active Tutors

    1450515

    Questions
    Answered

    Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

    Submit Assignment

    ©TutorsGlobe All rights reserved 2022-2023.