Answer to Question #204035 in Financial Math for Nicholas Ferencz

Question

You give up a full-time salary of $45,000 a year to go to school for 2 years. The total cost of going to school is $30,000. If you want to be able to recover your investment in 5 years or less, what is the minimum salary you would need to earn upon earning your degree?

Answer 1

7 years out of work. So for seven years to lose income in the amount of:

$\$45 000\times7=\$315 000$

Also, the cost of training at the school was $30 000

Therefore, the total losses were: $\$315 000+\$30 000=\$345 000$

Since we need to recoup these losses in five years, we need to divide the total losses by 5 and get the minimum income:

$\frac{\$345 000}{5}=\$69 000$