Adam Smith is considering an MBA degree. He estimates that he will forgo after t

Question

Adam Smith is considering an MBA degree. He estimates that he will forgo after tax income of $10, 000 a year (he will have a part time job), during the three years it will take him to complete the degree, but his expenses will be $8,000 a year less than if he were working. Tuition will be $10, 000 at the beginning of the first year, $11,000 at the beginning of second year, and $12,000 at the beginning of third year. He estimates that his income will be $ 10, 000 higher the first year after his MBA degree, and the difference will grow at 3 percent a year thereafter, for his 30-year working life after he receives the MBA. He can borrow money needed at an interest rate cost of 15%, after tax. Would you recommend that he pursue the MBA degree?

Explanation / Answer

Yes he should pursue the MBA degree, as its going to be beneficial in long run

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

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