How does Ben's age affect his decision to get an MBA?
Age is definitely a huge factor in his decision to get an MBA. The younger the individual, the more opportunity for salary increases which in turn, the quick he can recover his costs of returning for an MBA. These costs include the opportunity cost of lost income in pursuing his MBA as well as the cost of the tuition itself. 2.
What other, perhaps nonquantifiable, factors affect Ben's decision to get an MBA? The location of the Business School could be a huge factor. There are generally more job opportunities in bigger cities which in turn will have more opportunities for internships. His personal life will have major implications. Depending on if Ben has a family on his own, going back to get an MBA would not be the most logical decision. Especially with a missing salary and moving with his famil to a new location Other factors include his current job satisfaction and his motivational desires in term of getting an MBA and starting a new career 3.
Assuming all salaries are paid at the end of each year, what is the best option for Ben from a strictly financial standpoint?
Ben believes that the appropriate analysis is to calculate the future value of each option. How would you evaluate this statement?
What initial salary would Ben need to receive to make him indifferent between attending Wilton University and staying in his current position? (Hint: Find the after tax salary needed by using the formula for the present value of a growing annuity given to you in your “Discounted Cash Flow Valuation” handout on September 19. Then convert to a pretax salary.)
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