Question

Joe is 40 years old and considering quitting his job to return for a college degree. He needs two more years full-time. Tuition is $10,000 per year. He earns $30,000 per year. A college degree would raise his annual income by $10,000 per year. He will retire at age 70. From an investment standpoint, should Joe go back full-time to school?

Answer 1

Answer :

From an investment standpoint Joe should go back to full-time to school.

because it will increase his qualification and income which will lead to long-term profit gain.

joe is 40 years old . He earns $30,000 per year

if he will quit job and join college for two years he will invest $10,000 as a tution fee per year. that means $20,000 for two years.

after two years he will be 42 yars old

if he don't join college than he will earn total $300,000 till the age of 70 when he will retire -

40 years to 70 years = 30 years

$10,000 per year . so he will earn in 30 years = 30,000*30 = $900,000

if he joins college his degree will raise his annual income by $10,000 per year means now he will earn $40,000 per year

he will start working again at the age of 42 and till the age of 70 when he will retire so he will work for 28 years

his total earning in these years will be = 40,000* 28 = $ 11,20,000

so we can see that if he does not join college he will only earn $900,000 in the rest of his working years till retirement and if he joins college and get the degree he will earn $11,20,000 only in 28 years ( his remaining working years till retirement).

so he should go back to join the full-time school

*hope it is clear to you. please give feedback.