Question

You are trying to decide whether or not to go to graduate school. If you get a job right after you get your bachelor’s degree, you expect to earn $40,000 a year, and you expect your salary to increase by 5 percent a year for the next 40 years. If you go to graduate school, you will spend four more years at school. The tuition and books are expected to cost $8,000 a year.
Assume living expenses are $15,000 a year. After graduate school, you expect to start at a higher salary that will increase by 7 percent a year. However, you will only be able to work for 36 years. Your savings earn 4 percent a year.
What is the minimum post-graduate school starting salary you will require to make going to graduate school a positive NPV project? Use Excel “solver” function.



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  • CreatedFebruary 25, 2015
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