To determine if Anton should take the professional development classes, we will calculate the net present value (NPV) of the investment.
The NPV formula is:
NPV = (Cash inflows / (1 + interest rate)^year) - Initial investment
In this case, the initial investment is $22,000, and the cash inflow is an additional $1,000 in salary every year for the rest of Anton's long career. Since Anton's long career is not specified, we will assume it is 25 years.
The interest rate is 5%, so we need to divide it by 100 to convert it to decimal form: 5% / 100 = 0.05
Plugging the numbers into the NPV formula:
NPV = ($1,000 / (1 + 0.05)^25) - $22,000
Calculating the present value of $1,000:
PV = $1,000 / (1 + 0.05)^25 = $397.45 (rounded to the nearest cent)
Calculating the NPV:
NPV = $397.45 - $22,000
NPV = -$21,602.55
The NPV is negative, which means that the investment is not expected to return a positive value. Therefore, Anton should not take the professional development classes.
1. Anton could take professional development classes this year. The classes will cost him $22,000. If he takes the classes, he will make $1,000 a year more in his salary for the rest of his long career. If the yearly interest rate is 5%, should Anton take the classes? Show your work
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