1 ) How does Ben's age have an effect on his decision to receive an MASTER OF BUSINESS ADMINISTATION? В
Age will be key point affecting his decision to getting an MBA course in multiple methods. After managed to graduate six years ago, time has been removed from education and invested into his career. Keeping on risingwith age and six years break coming from education, expense only be more difficultto put emphasis and remain good attitude towards studies, but likewise keep as well as work responsibilities. Moreover, he would have just approximately 35 to 39 more years for operate if he decides for taking the program. Thisdoes not agreement with his initial plan to work for 40 more years.
Through the financial feature, the opportunity expense of taking MASTER OF BUSINESS ADMINISTATION program could keep increasing because his salary will surge 3% yearly and thus, making the actual expense of the program more expensive every year.
installment payments on your What other, perhaps nonquantifiable factors, affect Ben's decision to get a great MBA? В
First of all, the significant environment fantastic six years job encounters will have an effect on his decision if ben is satisfied with them. It is because he must surrender those by using MBA system. On top of that, personal satisfaction or perhaps choice when it comes to attending a specific school including attendingThe Hong Kong Polytechnic School will also affect the decision of obtaining an MBA. In contrast, if perhaps he isnot interested in studying, he could do other activities such as having another secure job. The choice will also be affected by the desire of employed in investment bank.
Furthermore, Ben's marital position will affect his decision because of the expenditures to raisechildren. That means the economy responsibility to his loved one will affect the decision.
3. Assuming all incomes are paid at the end of each and every year, precisely what is the best option pertaining to Ben вЂ“from a purely financial standpoint?
From this situation, there will be three choices to make. From a strictly economic standpoint, it is advisable to compute the net present value of people options.
Presumptions: 1) Most costs paid out at the beginning of every school season
2) Affixing your signature to bonus pay at the beginning of signing year
we. Keeping his current be employed by 40 years
After-tax salary: $60, 000 (1-26%)
Present Value (PV) of Growing Annuity:
PHOTO VOLTAIC = C 1 вЂ“ [(1+g)/(1+r)] t / r вЂ“ g
PHOTO VOLTAIC = $44, 400 1 вЂ“ [(1+3%)/(1+6.5%)] 40 / 6.5% - 3%
PV = $935, 283. 49
ii. Examine at Wilton University
a) PV of costs intended for 2 years (tuition, books and supplies, health and wellness14911 rent fee) All costs = $65, 000 & $3, 500 + $3, 000 & $2, 1000 = $73, 000
Present Value (PV) of Premium due:
PV due = PV (1+r)
PV credited =C [1 вЂ“ (1/(1+r)t / r] (1+r)
PV due = $73, 500 [1 вЂ“ (1/(1. 065)2 as well as 6. 5%] (1+6. 5%)
PHOTOVOLTAIC due = $141, 544. 60
b) PHOTO VOLTAIC of putting your signature on bonus
After-tax bonus: $20, 000 (1-31%)
Present Value (PV) of Premium:
PV = FV as well as (1+r)t
PHOTO VOLTAIC = 13, 800 as well as (1+6. 5%)2
PV sama dengan 12, 166. 90
c) PV of salary after the program pertaining to 38 years
After-tax income: $110, 500 (1-31%)
=$75, nine hundred
Present Benefit (PV) of Growing Premium:
PV sama dengan C 1 вЂ“ [(1+g)/(1+r)] t / r вЂ“ g
PV = $75, 900 1 вЂ“ [(1+4%)/(1+6.5%)] (40-2) / 6.5% - 4%
PHOTOVOLTAIC = $1, 804, 927. 68
We need to discount the amount flow of salary because it received after finished the MBA plan.
PV sama dengan $1, 804, 927. 68/ (1+6. 5%)2
PV = $1, 591, 331. 25
Therefore , the net present value of Study at Wilton University or college: NPV sama dengan -$141, 544. 60 + $12, 166. 90 + $1, 591, 331. 25
NPV = $1, 461, 953. fifty four
iii. Research at Attach Perry College or university
a) PHOTO VOLTAIC of costs for one year (tuition, books and products, health insurance and hire fee)
All costs = $80, 000 + $4, 500 & $3, 500 + $2, 000 sama dengan $89, 500
Present Value (PV) of Annuity thanks:
PV credited = PHOTOVOLTAIC (1+r)
PHOTOVOLTAIC due = $89, 500
b) PV of signing benefit
After-tax reward: $18, 500 (1-29%)
Present Value (PV) of Annuity:
PHOTO VOLTAIC = FV / (1+r)t
PV sama dengan 12, 780 / (1+6. 5%)
PHOTOVOLTAIC = 12, 000
c) PV of salary after...
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