Contemporary Labor Economics 9th Edition by Campbell Mcconnell, Stanley Brue, David Macpherson, Robert Powell, David Colander

Exercise 1

Floyd is now working in a job that pays $8,000 per year. He is contemplating a one-year automobile mechanics course that costs $1,000 for books and tuition. Floyd estimates that the course will increase his income to $13,000 in each of the three years following completion of the course. At the end of those three years, Floyd plans to retire to a commune in Boulder, Colorado. The current interest rate is 10 percent. Is it economically rational for Floyd to enroll in the course?