2 Individual Problems 192 Many police officer positions requ

2. Individual Problems 19-2 Many police officer positions require the applicant to have a college degree, even though the tasks of a police officer rarely call upon college course material. Suppose two individuals who do not have college degrees are considering applying to the police force. Van is considering applying for an officer position and plans on working for the police force for a period of time, over which he would earn approximately $450,000 (in present discounted value) in earnings while in the position. Antonio is also considering applying, and plans on working as an officer for a period of time, over which he would earn approximately $3,600 (in present discounted value) in lifetime earnings while in the position. Also suppose that present value of obtaining a college degree, which is required to submit a job application to the police department, is $90,000 Use the following table to indicate whether each individual would likely apply, or not, given the cost of obtaining a college degree. Would Apply Would Not Apply Buyer Van Antonio

Solution

The cost of obtaining the degree for both the students is $90000. Given this, Van would apply for the position as his lifetime earnings would be $450000 which is far greater than the costs which is $90000. On the other hand, Antonio won\'t apply for the position as his lifetime earnings would be just $3600 which would be far less than the cost which is $90000. Hence Van applies for the position while Antonio does not.