Sarah is considering going to school full time to earn a masters degree in biology....
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Sarah is considering going to school full time to earn a masters degree in biology. Her undergraduate degree cost her $60,000 of which she borrowed $10,000 (assume 0 interest for borrowing). The degree takes two years to complete. So, she will have to give up her current $40,000/year job as a science teacher. The cost of tuition is $30,000 per year. Her living costs will be $15,000 per year which is what they are now. When she graduates she expects to earn $80,000 per year.
Required:
a) What are the alternatives in this decision problem?
b) Which of these amounts are relevant/irrelevant to Sarahs decision?
c) What is the differential cost of Sarahs masters degree? What is the expected differential
benefit of Sarahs masters degree? d) How long does it take to make up the cost?
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