The Mba Decision Ch.6 Minicase

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Betsy Bellard
Dr. Praveen K. Das
Minicase Chapter 6
January 30, 2013
1. How does Ben's age affect his decision to get an MBA?
Age plays a huge part in Ben's decision to get his MBA and to be able to become an investment banker he will need to start on his MBA as soon as possible. The longer Ben waits, the harder it will be for him to accomplish this goal. By completing his MBA at a young age, he will have the opportunity to potentially raise his income by 4% each year. Also, most businesses are not allowed to discriminate against an applicant's age, but they do prefer to hire younger applicants over older applicants. The longer Ben waits, the less chance he will get the opportunity to become an investment banker, as well as increasing his income. Also, it might be harder for Ben to go to school at a later age, due to the fact that he has been out of school for so long and might have forgotten a lot of the information. Therefore, Ben's age is a crucial deciding factor on why he should get his MBA. 1. Assuming all salaries are paid at the end of each year, what is the best option for Ben from a strictly financial standpoint? From a strictly financial standpoint of view, Bradley school is the best option for Ben. Investing in the MBA program at Bradley School will be paid off sooner since it is only a one-year program and cost less than the Ritter College. Thus, the present value with an MBA degree at Bradley School will be higher compared to the other two options. However, Ben ends up making $4,828,685.85 after working 38 years with an MBA degree with Ritter College, compared to $2,298,937 with an MBA degree at Bradley School. (Excel Spreadsheet)

Without MBA| (26% tax)| With MBA at Ritter| (31% tax)| With MBA at Bradley| (29% tax)| | | 10000| 6900| 8000| 5680|
53000| 39220| -60000| | -79200| |
54590| 40396.6| -60000| | 78000| 55380|
56227.7| 41608.498| 87000| 60030| 80730| 57318.3|
57914.531| 42856.75294|...
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