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Originally Posted by asquare
Right, but the salary gains you posit would come even later -- and what matters is when they come relative to the foregone $40,000.
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No, I think you were right in the last post. The forgone $40,000 should be discounted by (1 + discount rate), and the part about PV(perpetuity) = A/r where A stands for future annual cash inflow was still correct. Break-even condition (NPV = 0) would then be 40,000/1.04 = A/.04 => A = 1,538. That's the extra amount you'll have to make each year so that you can make up for the foregone income of $40,000.
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Originally Posted by asquare
But this is really not related to the OP's question, so let's not hijack the thread  |
Okay. By the way, some professors have told me that American students make up only 20% of all econ phd students. Is this the case at U Michigan? One more thing, did you have your profile posted somewhere on this board? I'm applying to U Michigan and I'd love to know the profile of a successful applicant.