Question

Janette estimates that her earnings for the next 5 years with only a BS degree will...

Janette estimates that her earnings for the next 5 years with only a BS degree will be $40,000 per year. After those initial 5 years, she will start to earn monthly salaries that last forever. For each of these infinitely many years, she estimates that each year her salary will be $A per month for the first 6 months (January through June) and $2A per month for the next 6 months (July through December).

If she can get an MS degree, her earnings would be $48,000 per year for the subsequent 4 years of obtaining her MS degree (i.e., for years 2, 3, 4 and 5). But her earnings while working on the MS degree (year 1) will be negligible and her additional annual expenses during her MS education (year 1) will be $12,000. If she receives an MS degree, after those four initial years, each year her monthly salary will be $A + x for the first 6 months and $2A + 2x for the following 6 months. She will earn these monthly salaries again forever.

For an annual effective interest rate of 10% compounded monthly, find the value of x for which the extra investment in MS education will pay for itself.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Chris is planning for her son's University education to begin five years from today. She estimates...
Chris is planning for her son's University education to begin five years from today. She estimates the yearly tuition, books and living expenses to be $5 000 per year for a four-year degree. Assume that all living expenses are paid in full at the end of each year of study. Approximately how much must Chris deposit today, at an interest rate of 8% per annum, for her son to be able to withdraw $5 000 per year for four years...
Susan gets a job upon completion of her MSME degree with a mechanisms design firm. her...
Susan gets a job upon completion of her MSME degree with a mechanisms design firm. her starting salary is $79,000: each successive year she gets a 5% raise. Assuming she deposits 10% of her salary each year into a fund earning 8% interest, how much money will she have in 10 years to donate to her university? (a) $139,575 (b) $115,101 (c) $151,501 (d) $110,551
The median annual earnings for someone with only a High School Degree is about $35,000 per...
The median annual earnings for someone with only a High School Degree is about $35,000 per year, which you estimate to be the equal-series amount you would earn without the engineering degree. Assume you would start work right out of High School and continue to work for 40 years before retirement. Assume your job health insurance and retirement benefits are the same as a job with a college degree. What is the estimated Future Equivalent Value (before tax) from your...
Yumi's grandparents presented her with a gift of $22,000 when she was 9 years old to...
Yumi's grandparents presented her with a gift of $22,000 when she was 9 years old to be used for her college education. Over the next 8 years, until she turned 17, Yumi's parents had invested her money in a tax-free account that had yielded interest at the rate of 4.5%/year compounded monthly. Upon turning 17, Yumi now plans to withdraw her funds in equal annual installments over the next 4 years, starting at age 18. If the college fund is...
If your daughter wants to earn $215,000 within the next twenty-three years and the salaries grow...
If your daughter wants to earn $215,000 within the next twenty-three years and the salaries grow at 4.45% per year. What salary should she start to reach her goal? Future Value (FV) 215000 Interest Rate (i) 0.0445 Number of years (n) 23 Answer- Please show exact cell entry into Excel including the =FV
A company plans to pay no dividends in the next 3 years because it needs earnings...
A company plans to pay no dividends in the next 3 years because it needs earnings to finance new investment projects. The firm will pay a $3.00 per share dividend in year 4 and will increase the dividend by 20% per year for the next 3 years (i.e., year 5 to year 7). After that the company will maintain a constant dividend growth rate of 6 percent per year forever. The required return on the stock is 16% per year....
Your second cousin has just turned 30 years old, has just received her master’s degree in...
Your second cousin has just turned 30 years old, has just received her master’s degree in neurofinance and has accepted her first job. Now she must decide how much money to put into her retirement plan. The plan works as follows: Every dollar in the plan is expected to earn 8% per annum. She cannot make withdrawals until she retires on her sixty-fifth birthday. After that point, she can make withdrawals as she sees fit. She plans on living to...
1. Kathleen wants to retire on $55,000 per year for 20 years. She estimates that she...
1. Kathleen wants to retire on $55,000 per year for 20 years. She estimates that she will be able to earn interest at the APR of 9% compounded annually, throughout her lifetime. To reach her retirement goal, Kathleen will make annual contributions to her account for the next 35 years. One year after making her last contribution, she will take her first retirement check. How large must her yearly contributions be?
Yumi's grandparents presented her with a gift of $17,000 when she was 10 years old to...
Yumi's grandparents presented her with a gift of $17,000 when she was 10 years old to be used for her college education. Over the next 7 years, until she turned 17, Yumi's parents had invested her money in a tax-free account that had yielded interest at the rate of 2.5%/year compounded monthly. Upon turning 17, Yumi now plans to withdraw her funds in equal annual installments over the next 4 years, starting at age 18. If the college fund is...
Alexis want to buy a house in 5 years. She wants to save $75,000 over the...
Alexis want to buy a house in 5 years. She wants to save $75,000 over the next five years for a down payment. If she can earn an annual rate of 9% on her savings, how much must she deposit in equal payments at the end of each month for the next five years to reach her goal? A) $1,250                    B) $765.87                  C) $994.38                  D) $8,420.13 Alexis is ready to buy her house. She will purchase the $450,000 house with...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT