Question: You are 30 years old and are considering full-time study for an MBA degree. Tuition and other direct costs will be $15,000 per year for

You are 30 years old and are considering full-time study for an MBA degree. Tuition and other direct costs will be $15,000 per year for two years. In addition, you will have to give up a job with a salary of $30,000 per year. Assume tuition is paid and salary received at the end of year. By how much does your salary have to increase (in real terms) as a result of getting your MBA degree to justify the investment? Assume a real interest rate of 3% per year and ignore taxes. Also assume that salary increase is a constant real amount that starts after your complete your degree (at the end of the year following graduation) and lasts until retirement at age 65.

Investing in Human capital - A How much is the present value of two years' tuition?

Investing in Human capital - B How much is the present value of the two years' tuition and salaries given up for the MBA study?

Investing in Human capital - C How much is the worth the two years' tuition and salaries given up for the MBA study at the end of two years (at the time to finish the study)?

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