1. John is trying to decide if he should attend college or not. Part of his deci

Question

1. John is trying to decide if he should attend college or not. Part of his decision will be based on the return on investment of college. He estimates that the per year cost to attend Texas Tech including room and board is $24,044 per year. He also assumes tuitions costs will rise by 6% per year. How much is a 4 year degree going to cost John?

2.   John recognizes that not only will he have the costs of attending school but he will also be giving up a salary while he attends school. He figures the average salary for those with only a high school diploma is $33,176. He assumes he would receive a 3% cost of living raise each year. Determine how much money he will forgo while attending school.

3.   If John adds the cost of college with the salary he will forgo by attending college he finds it will cost: __________________ in total. (Keep in mind that this does not include any interest on loans needed to pay for school).

4.   Continuing from question 3. Help John determine if it really is worth it to get a college education by comparing his ROI going to college and his ROI not going to college. After some research John discovers that for his career choice over the next 20 years he can expect to earn $1.6 million with a degree and $809,000 without one. What is John’s additional benefit (ROI) from going to college? Determine this ROI 20 years after he finishes college.

Is this is a good ROI or not? List at least 3 other factors besides ROI that John should consider.

Explanation / Answer

     1 Details Year 1 Year 2 Year 3 Year 4 Total Tution cost with yearly increase            24,044         25,487      27,016     28,637     105,183 So Total tution cost for 4 years course= $ 105,183.3      2 Details Year 1 Year 2 Year 3 Year 4 Total Salary foregone with expected rise            33,176         34,171      35,196     36,252     138,796 Total salary foregone is 4 years= $ 138,796.0      3 Total Cost of attending degree course= $ 243,979.3      4 Earning Comparison Without degree With Degree Earning in 20 years          809,000 1,600,000 Less Costs of Degree    (243,979) Net Return expected          809,000 1,356,021 Additional benefit of going to college          547,021

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.