1. From the College Scorecard, average costs of attending UCR is $13,144. Average salary for UCR attendees is $48,700.
Average salary of someone who does not attend college is roughly $33,800 ($651/week from slides x 52 weeks). Suppose everyone retires at age 65, everyone leaves high school at age 18, and college lasts 4 years.
a. What is the present discounted value of working immediately instead of going to college if the interest rate is 0.05 (r=1/(1.05))? What is the present discounted value of going to UCR? Financially speaking, is going to UCR a good deal (assuming you would be continuously working and no wage growth)? Hint: 1+r+r2+...+r46=(1-r47)/(1-r). 1+r+r2+r3=(1-r4)/(1-r). r4+r5+...+r46=(r4-r47)/(1-r).