2. What other, perhaps non-quantifiable factors, affect Ben's decision to get an MBA? If Ben works hard on his MBA, he will get great grades and possibly a high GPA which can have better opportunities and promotions.
3. Assuming all salaries are paid at the end of each year, what is the best option for Ben, from a strictly financial standpoint? Wilton Mount. The program is a year longer, but he will earn a higher salary, with a higher increase each year. Tax rates will be lower. Books and tuition are less expensive.
4. Ben believes that the appropriate analysis is to calculate the future value of each option. How would you evaluate this statement? I would agree that Ben is making the right decision by evaluating all of his choices.
5. What initial salary would Ben need to receive to make him indifferent between attending Wilton University and staying in his current position? He currently earns 55,000 a year. After attending Wilton University, he will be qualified to earn 100,000 a year. He would need 45,000 additional to make him stay in his current position.
6. Suppose, instead of being able to pay cash for his MBA, Ben must borrow the money. The current borrowing rate is 5.4%. How would this affect his decision? This could affect his decision in a positive way. He could take student loans to pay for his MBA and use his savings for living expenses while he is in school. He can defer payments until after graduation.