Nancy Geer is considering an MBA degree. She estimates that she will forgo after

Question

Nancy Geer is considering an MBA degree. She estimates that she will forgo after tax income of $9,600 a year (she will have a part time job), during the two years it will take her to complete the degree, but her expenses will be $3,600 a year less than if she were working. Tuition will be $10,000 at the beginning of each year. She estimates that her income will be $4,800 a year higher, after tax, for her 40-year working life if she receives the MBA. She can borrow the money needed at an interest cost of 8 percent, after tax. Would you reccommend that she pursue the MBA degree?

Explanation / Answer

No MBA : Income will be PV(Rate,nper,PMT) = PV(8%,42,9600) = $115,264 With MBA : Income will be (3600-10000) + (3600-10000)/(1+8%) + PV(8%,40,9600) = $102,150 So She is better off wout MBA

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.