The following model allows the return to education to depend upon the total amount of both parents’ education, called pareduc: log(wage)=β0+β1educ +β2educ·pareduc +β3exper +β4tenure+u❑
a) What is the return to another year of education in this model?
Holding all other factors fixed we have
∆ log(wage)=β1∆ educ+ β2∆ educ·pareduc=(β1+β2· pareduc)∆ educ
Dividing both sides by ∆ educ gives the result (β1+β2· pareduc)
b) What sign do you expect for β2? Why

At the beginning of 2014, winston corporation issued 10% bonds with a face value of $2,000,000. these bonds mature in five years, and interest is paid semiannually on june 30 and december 31. the bonds were sold for $1,852,800 to yield 12%. winston uses a calendar-year reporting period. using the effective-interest method of amortization, what amount of interest expense should be reported for 2014? (round your answer to the nearest dollar.)

You are in the market for a new refrigerator for your company’s lounge, and you have narrowed the search down to two models. the energy efficient model sells for $700 and will save you $45 at the end of each of the next five years in electricity costs. the standard model has features similar to the energy efficient model but provides no future saving in electricity costs. it is priced at only $500. assuming your opportunity cost of funds is 6 percent, which refrigerator should you purchase

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