Anthony is about to graduate from high school. In deciding what he should do for

Question

Anthony is about to graduate from high school. In deciding what he should do for the next 14 years, he examines the two options before him: (1) Anthony can start working at a small neighborhood shop right after graduation and earn $12,000 per year for the next 14 years; (2) Anthony can attend a nearby college and earn a bachelors degree in four years. Tuition is $15,000 per year and Anthony knows he can get a job makin $28,000 per year for the 10 years following his college graduation. Disregard the effects of discounting. Enter the exact numbers for your answers to the numerical entry questions. Scroll down to see all parts of the question. thony decides to go to college, what is the total direct cost of degree? Number 48000 It Anthony decides to go to college, what is the total amount he will earn after graduating with his bachelors degree Number $ 280000 If Anthony decides to start working right after high school, what is the total amount he will earn during the next 14 years? Number $168000

Explanation / Answer

Tution fee per year for going to college = $15,000

Without graduation he can start earning at $12,000 per year

a) If Anthony decides to go to college then total direct cost of earning his four year degree is total tution fees paid by him

The income foregone by joining college would be an opportunity cost, although it is a cost associated with going to college but it is not direct cost it is indirect cost i.e. the earning he is leaving to join college. The direct cost would be the cost that is directly associated with his going to college which is tution fees.

Therefore, Total direct cost of earning his four year college degree = Tuition fee per year*time to earn college degree = 15000*4 = $60,000

b) If Anthony decides to go to college then he will earn $28,000 for next ten years

So he would earn total amount = Earnings per year*Time = 28,000*10 = $280,000

c) If Anthony decides to start working after high school then he will earn $12,000 for next 14 years

So he would earn total amount = Earnings per year*Time = 12,000*14 = $168,000

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