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Suppose in August of 2015 a high school senior is offered on of the following two tuition vouchers: A voucher that pays $2000 for the upcoming academic year (2015) A voucher that pays $3000 2 academic years in the future (2017) Assume that the student’s decision is based solely on the time value of money. A) If the student chooses the first option what does that imply about the student’s discount rate? Explain or show how you reach your answer. B) Which option would we expect students with a 25% discount rate to choose? Show how you arrive at your answer.

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