Business, 23.04.2020 23:21 diyah843

A worker who is close to retirement is choosing between two possible paths for the rest of their career. One possibility is to continue working in their current job, in which case they will earn $50,000 per year this year and each of the subsequent 4 years. Alternatively, they could not work this year but instead enroll in a one-year intensive coding program that costs $20,000, in which case they would earn $70,000 per year each of the four years after this one. Let i denote the nominal annual interest rate.

a. Use the concept of present value to explain how the worker should go about deciding which choice is better financially
b. If the interest rate is 5%, which choice will make the worker better off financially? What if the interest rate is 10%?

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