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Finance - compare earning to college degree

Your decision to obtain a college education was likely based on a desire to achieve higher standards, but to a lesser degree, it may be because you want to earn more money in your job, and/or prepare yourself for a new career. For most, this is a major financial commitment.

Let's say at the end of two years, you expend $30,000 in tuition, books, and related expenses, and as a result of earning a degree, you expect your after-tax income to rise by $6,000 per year for the next six years. If you didn't spend your savings on a college education, assume you could invest it and earn 4% on a high-yield money market savings account, and if you're willing to take more risk, you can earn 6% in a moderate growth stock mutual fund.

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The first question is what are the higher earnings, $6000 X 6 = $36,000, a net gain of $6000.

The second question is if the money were ...

Solution Summary

Computations are shown step-by-step for you.