If Jane gets one year of college she will earn $20 per hour. If Jane gets two years of college she will earn $22 per hour. If Jane gets three years of college, she will earn $24 per hour. If Jane finishes college, she will earn $25 per hour. Jane’s discount rate is 6 percent per period.
a. Derive Jane’s marginal rate of return schedule.
b. How many years of schooling will Jane get? Why?