Marcie needs to decide whether to spend $8,000 on a two-year degree that will qualify her for a $32,000 a year job or go to work now and make $16,000 a year. She will work part-time while in college and make about $4,000 a year. (For purposes of this exercise disregard the effects of interest or inflation.)
How many years after graduation will it take Marcie to recover her investment if she goes to college?
So the answer will be 12000.*
Marcie will need to make $12,000 more than she would have made without the degree in order to recover her investment. This means that it will take her 12000/32000 = 0.375 years, or 3 months, after graduation to recover her investment.
No, no, my friend! The answer is not 12,000 years! I think you need some comic relief here. So, let me help you with the math.
Let's see, if Marcie goes to college, she will earn $32,000 per year after graduation. If she decides not to go to college, she will make $16,000 per year instead. Simple subtraction tells us that Marcie will make an extra $16,000 per year by going to college.
Now, we also know that Marcie will be working part-time while in college and earning about $4,000 per year. So, if we subtract this amount from the $16,000 extra she would make, we get $12,000 per year that she's actually gaining by going to college.
To figure out how many years it will take for Marcie to recover her $8,000 investment, we just have to divide $8,000 by $12,000. And guess what? The answer is not 12,000 years, my friend! It's actually 0.67 years, or about 8 months.
So, to sum it up, Marcie will recover her investment in college in less than a year. That's definitely a good investment, don't you think? Or maybe I'm just clowning around! 🤡
To calculate the number of years it will take Marcie to recover her investment if she goes to college, we need to compare the total earnings from going to college with the total earnings from working immediately.
Let's break down the calculations step-by-step:
1. Calculate the total earnings after graduation if she goes to college:
Total earnings after graduation = (Annual salary - Part-time work income) * Number of years
Total earnings after graduation = (32,000 - 4,000) * 2 (since it's a two-year degree)
Total earnings after graduation = 28,000 * 2
Total earnings after graduation = 56,000
2. Calculate the total earnings if she goes to work immediately:
Total earnings if she goes to work immediately = Annual salary * Number of years
Total earnings if she goes to work immediately = 16,000 * 2
Total earnings if she goes to work immediately = 32,000
3. Calculate the difference in earnings:
Difference in earnings = Total earnings after graduation - Total earnings if she goes to work immediately
Difference in earnings = 56,000 - 32,000
Difference in earnings = 24,000
4. Determine how many years it will take to recover the investment:
Years to recover investment = Cost of education / Difference in earnings
Years to recover investment = 8,000 / 24,000
Years to recover investment = 1/3
Therefore, it will take Marcie approximately 1/3 of a year (or approximately 4 months) to recover her investment if she goes to college.
To find out how many years it will take for Marcie to recover her investment if she goes to college, we need to compare the earnings from going to college to the earnings from working immediately.
Let's calculate the earnings for each option:
1. Going to College:
- Cost of two-year degree: $8,000
- Earnings after graduation: $32,000 per year
- Part-time earnings during college: $4,000 per year
- Total earnings after graduation (assuming no change in salary): $32,000 + $4,000 = $36,000 per year
2. Working immediately:
- Annual earnings: $16,000 per year
Now, let's calculate the number of years it will take for the earnings from going to college to surpass the earnings from working immediately:
Cost of college investment: $8,000
Annual earnings difference: $36,000 - $16,000 = $20,000
Years to recover investment = Cost of college investment / Annual earnings difference
Years to recover investment = $8,000 / $20,000 = 0.4 years
Since we can't have a fraction of a year, we need to consider the partial year as well. To do that, we convert the partial year into months:
Months to recover investment = 0.4 years * 12 months/year = 4.8 months
Therefore, it will take approximately 4.8 months for Marcie to recover her investment if she goes to college.
Note: Your statement that the answer will be 12,000 is not correct. The correct answer is approximately 4.8 months.