Studies have concluded that a college degree is a very good investment. Suppose that a college graduate earns about 7575 % more money per hour than a high-school graduate. If the lifetime earnings of a high-school graduate average $1 comma 200 comma 0001,200,000 , what is the expected value of earnings of a college graduate?

expected value of earnings = $2100000

Explanation:

given data

rate of excess earning = 75%

lifetime earnings average = $1,200,000

to find out

expected value of earnings

solution

we get here expected value of earnings that is express as

expected value of earnings = lifetime earnings + (rate of excess earning * lifetime earnings) ... 1

put here value we get

expected value of earnings = $1,200,000 + (75% * $1,200,000)

expected value of earnings = $1,200,000 + $900000

expected value of earnings = $2100000