Ms. Taylor is 21 years old and she just obtained her MBA degree. She is considering...

Ms. Taylor is 21 years old and she just obtained her MBA degree. She is considering the following two career options:

(a)Start working now, earning an annual salary of $60,000 in each of next 44 years.

(b)Enroll in a PhD program, in 4 years and subsequent work for 40 years, earning each year the salary of $120,000.

Assume that her educational expenses at the end of each of 4 years will be $30,000. Also, assume that the relevant annual interest rate is 6% throughout, and all the annuities in the question are ordinary annuities. Based on the above information, find the implied or imputed monetary value of her PhD as of now.

Expert Solution

a) Present value of opton a, PV = 60000* PVIFA at 6% for 44 years

= 60,000 * 15.3832 = $ 922,992

b) Present value of salery after PhD = 120,000 * PVIFA at 6% for 40 years

= 120,000 * 15.0463 = $ 1,805,556

Present value of salary as on now = 1,805,556 * PVIF at 6% for 4 years

= 1,805,556 * 0.7921 = $ 1,430,180.91

Present value of cost of doing PhD = 30,000 * PVIFA at 6% for 4 years

= 30,000 * 3.4651 = $ 103,953

So, we have now PVs benefit and cost associated with PhD,

Net benefit = $ 1,430,180.91 - $ 103,953

= $ 1,326,227.91

jeff jeffy answered 2 years ago

You are 30 years old and are considering full-time study for an MBA degree. Tuition and...

You are 30 years old and are considering full-time study for an MBA degree. Tuition and other direct costs will be $20,000 per year for two years. In addition, you will have to give up a job with a salary of $40,000 per year. However, if you go on for two more years of graduate study, you can increase your earnings to $45,000 per year. Assume a real interest rate of 4% per year and ignore taxes. Also assume that...

You are 30 years old today and are considering studying for an MBA. You have just...

You are 30 years old today and are considering studying for an MBA. You have just received your annual salary of $50,000 which you expect will grow by 3% per year. MBA’s typically earn $80,000 upon graduation with salaries growing by 4% per year. The MBA program you’re considering is a full-time, 2-year program that costs $30,000 per year, payable at the end of each study year. You want to retire on your 65th birthday. The relevant discount rate is...

Your second cousin has just turned 30 years old, has just received her master’s degree in...

Your second cousin has just turned 30 years old, has just received her master’s degree in neurofinance and has accepted her first job. Now she must decide how much money to put into her retirement plan. The plan works as follows: Every dollar in the plan is expected to earn 8% per annum. She cannot make withdrawals until she retires on her sixty-fifth birthday. After that point, she can make withdrawals as she sees fit. She plans on living to...

Anna has just completed her undergraduate degree and is already planning to enter an MBA program...

Anna has just completed her undergraduate degree and is already planning to enter an MBA program one year from today. The MBA tuition will be $7,000 per year for 2 years, paid at the beginning of each year. In addition, Anna would like to retire 20 years from today and spend $50,000 every year for 10 years (years 20-29, withdrawn at the beginning of each year). To fund her expenditures, Anna will save money at the end of year 0...

Lillian Coleman is 21 years old and has just graduated from college. In considering the retirement...

Lillian Coleman is 21 years old and has just graduated from college. In considering the retirement investing options available at her new job, she is thinking about the long-term effects of inflation. Help her by answering the following related questions: Explain the effect of long-term inflation on meeting retirement financial planning goals. If long-term inflation is expected to average 4 percent per year and you expect a long-term investment return of 6 percent per year, what is Lillian's long-term expected...

Jade was four-years-old and wanted to be “just like her mommy.” She liked to dress the...

Jade was four-years-old and wanted to be “just like her mommy.” She liked to dress the same way as her mom, she insisted on dressing herself, and on and on. Jade also wanted to “fix” things as her dad and mom did, and she seemed satisfied even when she broke what she was trying to fix. Jade’s dad and mom often commented on how proud they were of their daughter. What would Freud say about why Jade imitates her mom’s...

1. Ms. Chan is 50 years old. She is a housewife. She is 1.60m tall and...

1. Ms. Chan is 50 years old. She is a housewife. She is 1.60m tall and weighs 45kg. She seldom engages in outdoor activities and stays most of the day inactive. She has constipation problem and suspected to have osteoporosis. She would like to use some supplements to solve these health problems. The supplements she wants to buy are a probiotic supplement and Calcium plus which are shown below. (Total 20 marks) Are there any health claims for the two...

Ms. J. is 73 years old with severe end stage renal disease. She lives alone. Ms....

Ms. J. is 73 years old with severe end stage renal disease. She lives alone. Ms. J. never married but had several long term relationships. She has one brother who lives across the country. She retired from her teaching assistant job four years ago because she just became too sick and the dialysis treatments were difficult to schedule around work. Ms. J. has always had "kidney" issues. She was born with one kidney which functioned moderately well most of her...

XVIII. Mandi tells the nurse that her boyfriend is a 21-year-old that she met in an...

XVIII. Mandi tells the nurse that her boyfriend is a 21-year-old that she met in an online chat room. After they go out to eat, he complains that she is fat and sometimes punches her in the stomach so that she will throw up her dinner and remember to eat less the next time. To gather data related to the frequency of abuse by Mandi's boyfriend what action should the nurse take first? 1. Instruct the client that there is...

Individual A just turned 30 years old, have just received your MBA, and have accepted your...

Individual A just turned 30 years old, have just received your MBA, and have accepted your first job. He must decide how much money to put into its retirement plan. The plan works as follows: Every dollar in the plan earns 7% per year. You cannot make withdrawals until he retires on his sixty-fifth birthday. After that point, individual A can make withdrawals as he sees fit. Individual A decides that he will plan to live to 100 and work...

Question