Essay on Ben Bates

636 Words3 Pages
BEN BATES MBA | Working | Wilton | Mount Perry | Annual Salary | 55,000 | 98,000 | 81,000 | Expected increase | 3% | 4% | 3.50% | Work (years) | 38 | 36 | 37 | Tax rates | 26% | 31% | 29% | Annual tuition | | $63,000 | $80,000 | Books and other supplies (annual) | | $2,500 | 3,500 | Programs (year) | | 2 | 1 | Signing bonus | | 15,000 | 10,000 | Health insurance (annual) | | $3,000 | 3,000 | Room and board (annual) | | $20,000 | $20,000 |

1. How does Ben's age affect his decision to get an MBA?
Ben's age will affect his decision to get an MBA in the sense that the earlier he gets an MBA the better off he will be. Being currently 28 years old, and he has been working for six years already MBA normally
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I believe the best way to solve this is too evaluate the three alternatives that must have the same timeframe. In this case each alternative has different time frame that is 38, 36, and 37 years. The best way to compare them is to find the present value for each alternative to find the right option.

5. What initial salary would Ben need to receive to make him indifferent between attending Wilton University and staying in his current position?
For Ben to be indifferent, I needed to change the amount that he receives from his current position until the present value is equal to attending Wilton University. The initial salary should be $213,221.01 annually. See Spreadsheet.

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? The interest rate of the loan will have to be factored into the calculation of the present values of the option. The payment terms of the loan should also be specified. He will have to think and consider for how long it will take for him to pay off the loan. He would then need to consider the present value of the cost for attending Wilton or Mount Perry and deduct it from the amount that he expects to receive. He may or may not get the job offer after the graduation from MBA as expected due to the decline in the job market. He should determine as to whether he will have
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