Sally is offered a salary bonus of $2,000 for each of the next two years if she enrolls in a job training program this year. The total cost to Sally including any forgone earnings is $3,500.
- What is the internal rate of return to this investment?
- Would this be a good investment for someone with a discount rate of 6%?
- What is the highest discount rate a person could have and still find this investment attractive?
- Is it possible for a person to have a higher discount rate than the market interest rate?
- If Sally were more present-oriented, would she be more or less likely to obtain the training?