Fundamentals of Corporate Finance Plus MyFinanceLab with Pearson eText -- Access Card Package
3rd Edition
ISBN: 9780133576870
Author: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Publisher: PEARSON
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Textbook Question
Chapter 4, Problem 4DC
Calculate the present value of the salary differential for completing the MBA degree. Calculate the present value of the cost of the MBA program. Based on your calcula-
tions, determine the value of undertaking the MBA.
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Cost Planning; The Cost of an MBA; Time Value of MoneyThe motivation for getting the MBA degree has many aspects—the prestige, greater opportunity for promotion, change of occupation, and increase in pay. To focus just on this last motivation, suppose that you are interested in getting an MBA and are studying the various programs in the United States. You want to balance the costs of getting the degree against the future benefits in increase of pay. You have information on the cost of two MBA programs, which includes the costs of tuition, living expenses, and forgone pre-MBA salary for the two years you are in the MBA program. School A has an average cost of $100,000, and school B, a far more prestigious school at which you think your grades would qualify you to be a suc-cessful applicant, has a cost of $250,000.
RequiredAssume that you have a 10-year planning horizon, that the difference in pay for a job after both schools would remain the same for all 10 years, and the relevant…
I'd like you to write a brief essay, which I anticipate will be between 300 and 400 words, answering the following questions:
Explain the definition of financial value.
How does an estimate of financial value of compare with the cost of a bachelor's degree?
What role, if any, do you think that risk plays in your analysis?
How would you attempt to measure the financial value of your bachelor's degree?
Studies have concluded that a college degree is a very good investment. Suppose that a college graduate earns about 75% more money per hour than a high school graduate. If the life time earnings of a high school graduate average $1,200,000, what is the expected value of earning a college degree?
Chapter 4 Solutions
Fundamentals of Corporate Finance Plus MyFinanceLab with Pearson eText -- Access Card Package
Ch. 4 - Prob. 1CCCh. 4 - Prob. 2CCCh. 4 - Prob. 3CCCh. 4 - Prob. 4CCCh. 4 - Prob. 5CCCh. 4 - Prob. 6CCCh. 4 - Howcanan infinitely...Ch. 4 - Prob. 8CCCh. 4 - Prob. 9CCCh. 4 - Prob. 10CC
Ch. 4 - Prob. 11CCCh. 4 - Whencashflowsoccur at anon-annual interval, what...Ch. 4 - What is the intuition behind the fact that the...Ch. 4 - What must be true about a cash flow stream in...Ch. 4 - Prob. 3CTCh. 4 - Prob. 4CTCh. 4 - Prob. 5CTCh. 4 - Prob. 6CTCh. 4 - What must be true about the growth rate in order...Ch. 4 - In what types of situations would it be useful to...Ch. 4 - Prob. 1DCCh. 4 - Prob. 2DCCh. 4 - Prob. 3DCCh. 4 - Calculate the present value of the salary...Ch. 4 - Prob. 5DCCh. 4 - Prob. 1PCh. 4 - What is the present value of the following set of...Ch. 4 - You want to borrow $10,000. You figure that you...Ch. 4 - Prob. 4PCh. 4 - You have just taken out a five-year loan from a...Ch. 4 - Prob. 6PCh. 4 - Prob. 7PCh. 4 - Prob. 8PCh. 4 - Prob. 9PCh. 4 - Prob. 10PCh. 4 - 11. Assume you can earn 9% per year on your...Ch. 4 - Prob. 12PCh. 4 - Prob. 13PCh. 4 - 14. The British government has a consol bond...Ch. 4 - Prob. 15PCh. 4 - 19. Your grandmother has been putting $1000 into a...Ch. 4 - 20. Assume that your parents wanted to have...Ch. 4 - Prob. 18PCh. 4 - Prob. 19PCh. 4 - 23. Assume that Social Security promises you...Ch. 4 - 24. When Alex Rodriguez moved to the Texas...Ch. 4 - Prob. 22PCh. 4 - A rich relative has bequeathed you a growing...Ch. 4 - Prob. 24PCh. 4 - Prob. 25PCh. 4 - Prob. 26PCh. 4 - 30. A rich aunt has promised you $5000 one year...Ch. 4 - Prob. 28PCh. 4 - Prob. 29PCh. 4 - Prob. 30PCh. 4 - 34. You have decided to buy a perpetual bond. The...Ch. 4 - Prob. 32PCh. 4 - 36. You are thinking about buying a piece oi art...Ch. 4 - 35. You are thinking of purchasing a house. The...Ch. 4 - Prob. 35PCh. 4 - Prob. 36PCh. 4 - 40. A local bank is running the following...Ch. 4 - Prob. 38PCh. 4 - Prob. 39PCh. 4 - 43. Suppose you currently have $5000 in your...Ch. 4 - 44. Your firm spends $5000 every month on printing...Ch. 4 - 45. You are looking to buy a car and can afford to...Ch. 4 - Prob. 43P
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