Problem:
Your friend is considering investing in a two-year MBA program. Tuition costs will be $60,000 for two years while living expenses will be $25,000 per year. She has $10,000 in savings, which she can spend on her education, and will need to borrow the rest from her bank. Her annual loan repayment will be $10,500. She currently works as an analyst and makes $60,000 a year; after she gets her degree she hopes
to work as a manager for $150,000 a year.
Refer to the seven-step procedure to answer these questions:
(a) How should your friend formulate her problem?
(b) What are her projected costs? (Identify all costs)
(c) Suggest alternatives to your friend to reduce the uncertainty associated
with finding a high-income job to pay off her loan
(d) Select a criterion for discriminating among alternatives, and use it to
advise your friend on which course of action to pursue.
(e) Attempt to analyze and compare the alternatives in view of at least one criterion in addition to cost.
(f) What should your friend do based on the information you and she have generated?
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