he answer in the solution book is not detailed so looking for help with this. He
ID: 2697257 • Letter: H
Question
he answer in the solution book is not detailed so looking for help with this.
Here is the case in case you don't have access to the book:
Ben Bates graduated from college six years ago with a finance undergraduate degree. Since graduation, he has been employed in the finance department at East Cast Yachts. Although he is satisfied with his current job, his goal is to become an investment banker. He feels that an MBA degree would allow him to achieve this goal. After examining schools he has narrowed his choice to either Wilton or Mount Perry. Although internships are encouraged by both schools, to get class credit for internship, no salary can be paid. Other than internships, neither school will allow its students to work while enrolled in its MBA program.
Ben's salary at East Cost Yachts is 50K and his salary is expected to increase at 3% per year until retirement. He is currently 28 years old and expects to work for 40 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 26%. Ben has a savings account with enough money to cover the entire cost of his MBA program.
The Ritter College at Wilton University is one of the top MBA programs in the country. The MBA degree requires two years of full time enrollment at the university. The annual tuition is 65K payable at the beginning of each year. Books and other supplies are estimated to cost 3500 per year. Ben expects that after graduation from Wilton he will receive a job offer for about 90K with a 15K signing bonus. The salary at this job will increase at 4% per year. His average income tax rate will increase to 31%.
The Bradley school at Mount Perry College began is MBA program 16 years ago. The Bradley School is smaller and less well known than the Ritter College. Bradley offers an accelerated one year program, with a tuition cost75K to be paid upon matriculation. Books and other supplies for the program are expected to cost 3500. Ben thinks that after graduation he will receive an offer of 78K per year with a $12K signing bonus. The salary at this job will increase at 3.5% per year. His average income tax rate will be 29%. Both schools offer a health insurance plan that will cost $3000 per year, payable at the beginning of the year. Ben also estimated that room and board expenses will cost 2000 more per year at both schools than his current expenses, payable at the beginning of the year. The appropriate discount rate is 6.5 %. Assume all salaries are paid at the end of each year.
1. How does Ben
Explanation / Answer
refer to below link http://selviautama.blogspot.in/2010/08/mba-decision.html
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