Billy is considering enrolling in an MBA program. It would cost him $22,000 a year for two years. He believes it would raise his salary, which is now $50,000 a year, by the following amounts:

Year ____________ Amount

1-5 ................. $15,000

6-10 ................ 20,000

11-15 ............... 25,000

Currently, Billy pays 28 percent of his salary in taxes; his tax bracket will change to 30 percent after the raise. Assuming that the required rate of return is 8 percent after taxes, should he make the investment? Use

(a) The NPV method and

(b) The IRR method to decide.