Microeconomics 6th Edition by Robert Hall, Shirley Kuiper, Marc Lieberman

Exercise 2

In the Using the Theory section,we calculated the present value of the costs of attending a private college,with no financial aid.
a. Using Table 1,what would have been the present value of the cost of college if we had done the analysis for a four-year public institution,with no financial aid? (Hint: Assume that future income does not depend on the type of college.)Table 1 Average Out-of-Pocket Cost of a Year of College,2010-2011
Source: Trends in College Pricing ,2010,The College Board,New York,NY.
Notes: Averages are enrollment-weighted by institution to reflect the average experience among students across the United States. Average tuition and fees at public institutions are for in-state residents only. Room and board charges are for students living on campus at four-year institutions and off-campus (but not with parents)at two-year institutions. Four-year private includes nonprofit only.
b. What is the percentage difference between the present value of costs at a private versus a public institution?
c. Private college tuition is about four times higher than public college tuition. Explain briefly why the (present value)cost figures do not differ this widely.