Question about PV and NPV
Hope someone can help me or give me some hints!!!! I dont know where to start.
A typical MBA student begins the 2 year full time program at the age of 28. Assume that he or she graduates at the age of 30 and work until retiring at the age 65. Also assume that the student would have earned $60000per year for the 2 years had they not gone to school and that tuition, books and fees totaled $15000 per year. The student require a return on their education investment of 5%
a)What is the present value of the costs of getting the MBA, assuming that feesare paid at the beginning of the year and that salaries are paid at the end of the year?
b) Assume the MBA degree leads to an extra $20000 of earnings per year above the salary without having the degree. What is the present value of the incremental $2 per year?
c)Using the above calculation what is the net present value of the MBA degree?
Please help!!!Thank you.
- 知足常樂Lv 77 years agoFavorite Answer
Cathy (◕‿◕✿) Let me help you.
For more details about the annuity formula, please read my old post: