Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 12

S. Census Bureau statistics show that the annual earnings for persons with a high school diploma are $35,220 versus $57,925 for someone with a bachelor's degree. If the cost of attending college is assumed to be $30,000 per year for 4 years and the forgone earnings during those years are assumed to be $35,220 per year, what rate of return does earning a bachelor's degree represent Use a 35-year study period. (Hint: The investment in years 1 through 4 is the cost of college plus the foregone earnings, and the income in years 5 through 35 is the difference in income between a high school diploma and a bachelor's degree.)