Question

Two people quit work and begin college at the same time. Their salary and education information is given in the table below. Salary prior to school Years attending college Total cost of college Salary upon graduating Person A $18,000 3 $45000 $33,000 Person B $27,000 4 $30,000 $37,000 Choose the true statement. a. Person A recovers their investment in a shorter amount of time. b. Person B recovers their investment in a shorter amount of time. c. They recover their investments in the same amount of time. d. There is too little information to compare the time to recover their investments. Please select the best answer from the choices provided

Answer 1

Answer:

b. Person A recovers their investment in a shorter amount of time

as his payback occurs at 4.09 years

while person A in 4.09 years

Explanation:

First person investment:

3 years x 45,000 dollars per year = 135,000 dollars

payback period:

135,000 dollars / 33,000 per year =  4.09 year

Considering opportunity cost:

18,000 x 3 = 54,000

Second person investment:

4 years x $30,000 = 120,000

payback period:

120,000 / 37,000 per year =  3.24

Answer 2

Answer:

A

Explanation: