Peter is 28 years old and is considering full-time study for a Master of Science (MSc) degree. Tuition and other direct costs will be $22,000 per year for three years. In addition, Peter will have to...

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Extracted text: Peter is 28 years old and is considering full-time study for a Master of Science (MSc) degree. Tuition and other direct costs will be $22,000 per year for three years. In addition, Peter will have to give up a job with a salary of $42,000 per year. However, if Peter goes on for three more years of graduate study, Peter can increase his earnings to $47,000 per year. Assume that the salary increase is a constant real amount that starts after he complete his degree at the end of the year following graduation and lasts until retirement at age 65. Also assume a real interest rate of 4% per year and ignore taxes. Assume tuition is paid and salary received at the end of the year. Should Peter accept this MSc degree investment? Provide relevant explanation. |