Question: A prospective MBA student earns $ 5 0 , 0 0 0 per year in her current job and expects that amount to increase by
A prospective MBA student earns $ per year in her current job and expects that amount to increase by per year. She is considering leaving her job to attend business school for two years at a cost of $ per year. She has been told that her starting salary after business school is likely to be $ and that amount will increase by per year. Consider a time horizon of years, use a discount rate of and ignore all considerations not explicitly mentioned here.
Assume all cash flows occur at the start of each year ie immediate, one year from now, two years from now,..., nine years from now Also assume that the choice can be implemented immediately so that for the MBA alternative the current year is the first year of business school.
What is the net present value of the more attractive choice?
Please round your answer to the nearest dollar.
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