Question

Jamal works part-time earning $8,000 per year. He reduces his work hours by half so that he can go to school. Jamal completes his degree after 3 semesters (1.5 years) at a cost of $1,400 per semester in tuition and $500 per semester in books. What was Jamal's investment in getting his degree?
a.
$4,700
b.
$5,700
c.
$11,700
d.
$17,700

Answer 1

Investment = explicit costs + forgone earnings.

Forgone earnings = half of $8,000 = $4,000 per year × 1.5 years = $6,000.
Tuition + books = ($1,400 + $500) × 3 = $1,900 × 3 = $5,700.

Total = $6,000 + $5,700 = $11,700.

Answer: c.