1. Getting a professional degree ca

1. Getting a professional degree can be evaluated as ________.a) a social security decisionb) an investment in human capitalc) an investment in a consumer durabled) a tax exempt decisionAnswer: (b)2. Suppose you will face a tax rate of 20% before and after retirement. The interest rate is 8%. You are 30 years before your retirement date and invest $10,000 to a tax deferred retirement plan. If you choose to withdraw the total accumulated amount at retirement, what will you be left with after paying taxes?a) $51,445b) $64,000c) $80,501d) $100,627Answer: (c)3. Suppose you will face a tax rate of 20% before and after retirement. The interest rate is 8%. You are 30 years before your retirement date and have $10,000 to invest. If you invest this in an ordinary savings plan instead of a tax deferred retirement plan, what amount will you have accumulated at retirement? a) $51,445b) $64,000c) $80,501d) $100,627Answer: (a) 4. When your tax rate remains unchanged, the benefit of tax deferral can be summarized in the rule, “deferral earns you ________.”a) the after-tax rate of return before taxb) the pretax rate of return after taxc) the after-tax rate of return after taxd) the pretax rate of return before taxAnswer: (b)5. From an economic perspective, professional training should be undertaken if the ________ exceeds the ________.a) future value of the benefit; present value of the costsb) present value of the benefits; future value of the costsc) future value of the benefits; future value of the costsd) present value of the benefits; future value of the costsAnswer: (d)6. Suppose you will face a tax rate of 30% before and after retirement. The interest rate is 6%. You are 35 years before your retirement date and $2,000 to a tax deferred retirement plan. If you choose to withdraw the total accumulated amount at retirement, what will you be left with after paying taxes?a) $7,532b) $10,760c) $12,298d) $15,372Answer: (b)7. Kecia is currently thirty years old and she plans to retire at age sixty. She is expected to live to age eighty-five. Her labor income is $45,000 per year and she intends to maintain a constant level of real consumption spending over the next fifty-five years. Assuming a real interest rate of 4% per year, no taxes, and no growth in real labor income, what is the value of Kecia’s human capital?a) $31,797b) $35,196c) $778,141d) $994,888Answer: (c)