Mary expects to retire in five years. She is considering one of three possible career changes. Each has different costs and benefits associated with it. Below is the distribution of costs and benefits over the next five years of each possible career path.

Y0 Y1 Y2 Y3 Y4

Path 1 -5,000 +2,000 +2,500 +1,000 +500

Path 2 -2,000 +3,000 -2,000 +3,000 +0

Path 3 +1,000 -4,000 +2,000 +1,000 +1,000

a. Calculate the present discounted value of each career path at a discount rate of 5% and at a discount rate of 15%.

b. Which career path has the highest net present value at each discount rate?

c. Which career path has the highest benefit/cost at each discount rate.

d. In general, how does the age at which one undertakes a career change impact on the likely return to the chosen career?