You are thinking of attending a two - year MBA Program. The cost of the MBA program
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You are thinking of attending a twoyear MBA Program. The cost of the MBA program is $ per year. Assume the first cash flows occurs at the end of year and subsequent cash flows occur at the end of the year. points
You expect the MBA program to increase your current salary by a certain amount for the five years after you graduate the MBA ie your first cash inflow is at the end of year and your last cash inflow occurs in year and nothing after the first five years of working. Assume a discount rate of You believe that the annual salary increase has four possibilities that are equally likely:
a $ increase in salary a $ increase in salary a $ increase in salary a $ increase in salary
a What is the expected value and standard deviation of the salary increase? point
b Conduct a Monte Carlo simulation with draws and report the average NPV and the standard deviation of the NPVhint: the draws come from the distribution of the salary increase for each of five years. point
c Estimate the NPV at the th percentile? Is the investment still worthwhile if you end up experiencing this th percentile outcome? Why or why not point
d Plot the frequency distribution with of times as your Yaxis, and NPV as your Xaxis point can you show me on excel? with monte carlo and explain how to do it
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