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Please give explanation!! 15. Fred is trying to decide whether to go to medical school or...

Please give explanation!!
15. Fred is trying to decide whether to go to medical school or open a store. If Fred goes to
medical school, he pays $100 in tuition in the present and earns $350 in the future. If Fred
opens a store, he earns $100 in the present and $100 in the future. If Fred discounts future
outcomes at rate r, he will open the store if
(a) r < 0.25.
(b) r > 0.25.
(c) r > 0.5.
(d) r < 0.5.
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Answer #1

Ans: (b)

Explanation:

Net benefit from medical school:

Net benefit from store:

He will open store if:

200 + 200r > 250

200r > 50

r > 50 / 200 = 0.25.

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