A Student Entering College Wants to Assess the Value of Investing

question 6

Multiple Choice

A student entering college wants to assess the value of investing in human capital. To determine whether the investment will be profitable, she should compare the

• A) value of her total expected future earnings with the total of her direct and indirect costs of college.
• B) present discounted value of future earnings with the total of her direct and indirect costs of her education.
• C) present discounted value of her additional future earnings as the result of the college education with the present discounted value of only her direct costs of college.
• D) present discounted value of her additional future earnings as the result of the college education with the present discounted value of her direct and indirect costs of college.

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Definitions:

Logical Fallacy

An error in reasoning that renders an argument invalid or undermines the logic of a discussion.

Analogy

A comparison between an unfamiliar idea, thing, or situation and something the audience already understands.

401(K) Retirement Plans

A tax-advantaged retirement savings plan offered by many employers in the United States, allowing employees to save a portion of their paycheck before taxes.

Employee Turnover

The rate at which employees leave a company and are replaced by new employees over a specific period.