![hannahbrown802](/avatars/41073.jpg)
hannahbrown802
16.09.2021 •
Business
Ben Bates graduated from college six years ago with a finance undergraduate degree. Although he is satisfied with his current job, his goal is to become an investment banker. He feels that an MBA degree would allow him to achieve this goal. After examining schools, he has narrowed his choice to either Wilton University or Mount Perry College. Although internships are encouraged by both schools, to get class credit for the internship, no salary can be paid. Other than internships, neither school will allow its students to work while enrolled in its MBA program.
Ben currently works at the money management firm of Dewey and Louis. His annual salary at the firm is $53,000 per year, and his salary is expected to increase at 3 percent per year until retirement. He is currently 28 years old and expects to work for 38 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 26 percent. Ben has a savings account with enough money to cover the entire cost of his MBA program.
The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $58,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $2,000 per year. Ben expects that after graduation from Wilton, he will receive a job offer for about $87,000 per year, with a $10,000 signing bonus. The salary at this job will increase at 4 percent per year. Because of the higher salary, his average income tax rate will increase to 31 percent.
The Bradley School of Business at Mount Perry College began its MBA program 16 years ago. The Bradley School is smaller and less well known than the Ritter College. Bradley offers an accelerated one-year program, with a tuition cost of $75,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $4,200. Ben thinks that he will receive an offer of $78,000 per year upon graduation, with a $8,000 signing bonus. The salary at this job will increase at 3.5 percent per year. His average tax rate at this level of income will be 29 percent.
Both schools offer a health insurance plan that will cost $3,000 per year, payable at the beginning of the year. Ben has also found that both school offer graduate housing. His room and board expense will decrease by $4000 per year at either school he attends. The appropriate discount rate is 6.5 percent.
Required:
a. How does Ben's age affect his decision to get an MBA?
b. What other, perhaps nonquantifiable, factors affect Ben's decision to get an MBA?
c. Assuming all salaries are paid at the end of each year, what is the best option for Ben from a strictly financial standpoint?
Solved
Show answers
More tips
- F Food and Cooking Kick Your Taste Buds Into Gear with This Authentic and Delicious Recipe for Solyanka...
- O Other What happens if you get scared half to death twice?...
- F Family and Home What s That Noise When a Kettle Boils? The Science of Water and Steam...
- L Leisure and Entertainment History of International Women s Day: When Did the Celebration of March 8th Begin?...
- W Work and Career How much does an honest traffic police officer earn in a day?...
- F Food and Cooking Red Caviar: How to Choose the Best?...
- S Style and Beauty How to Get Rid of a Bruise: Tips and Tricks...
- H Health and Medicine Is Massage Necessary? Facts and Opinions...
- L Leisure and Entertainment Should You Buy a Ceramic Knife?...
- C Computers and Internet Best Antivirus: How to Choose Protection for Your Computer?...
Answers on questions: Business
- B Business Rank the following items from the lowest (1) to highest (6) authority in the Federal tax law system: Ranking a. Interpretive Regulation. b. Legislative Regulation. c. Letter...
- B Business What are three causes and effects of the haymarket square riot...
- M Mathematics Find the discriminant of this equation x2 - 5x = 4a) 3 b) 9 c) 18 d) 41...
- H History What lead to the downfall of Assyria? A. They were fighting among themselves and the Chaldeans and Medes took advantage of this. B. The Assyrians grew to fond of war. C. The...
- P Physics A balloon drift starting me toward the east in 10 seconds in the wind suddenly changes the balloon flies 15 towards the West in the next 5 Seconds a.)what distance did it travel...
Ответ:
Ben Bates graduated from college six years ago with a finance undergraduate degree. Although he is satisfied with his current job, his goal is to become an investment banker. He feels that an MBA degree would allow him to achieve his goal
Explanation:Hope you understand but this is not the whole thing if you want me to tell you the full answer follow and like and give 5 star rating please.
Ответ:
$92,000
Explanation:
Average Investment = (Initial Investment + Scrap Value) / 2
Average Investment = ($184,000 + $0) / 2
Average Investment = $184,000 / 2
Average Investment = $92,000
Thus The amount of the average investment for a proposed investment is $92,000