The MBA Decision

Ben Bates graduated from college six years ago with a finance undergraduate degree. Although he is satisfied with his current job, his goal is to become an investment banker. He feels that an MBA degree would allow him to achieve this goal. After examining schools, he has narrowed his choice to either Wilton University of Mount Perry College.   Although internships are encouraged by both schools, to get class credit for the internship, no salary can be paid. Other than internships, neither school will allow its students to work while enrolled in its MBA program.

Ben currently works at the money management firm of Dewey and Louis. His annual salary at the firm is $55,000 per year, and his salary is expected to increase at 3 percent per year until retirement. He is currently 28 years old and expects to work for 38 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 26%. Ben has savings account with enough money to cover the entire cost of his MBA program.

The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $63,000 payable at the beginning of each school year. Books and other supplies are estimated to cost $2,500 per year. Ben expects that after graduation from Wilton, he will receive a job offer for about $98,000 per year, with a $15,000 signing bonus. The salary at this job will increase at 4 percent per year. Because of the higher salary, his average income tax rate will increase to 31 percent.

The Bradley School of Business at Mount Perry College began its MBA program 16 years ago. The Bradley School is smaller and less well known than the Ritter College. Bradley offers an accelerated one-year program, with a tuition cost of $80,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $3,500. Ben thinks that he will receive an offer of $81,000 per year upon graduation, with a $10,000 signing bonus. The salary at this job will increase at 3.5 percent per year. His average tax rate at this level of income will be 29 percent.

Both schools offer a health insurance plan that will cost $3,000 per year, payable at the beginning of the year. Ben also estimates that room and board expenses will cost $20,000 per year at both schools. The appropriate discount rate is 6.5 percent.

Questions

1.            How does Ben’s age affect his decision to get an MBA

2.            What other, perhaps nonquantifiable, factors affect Ben’s decision to get an MBA?

3.            Assuming all salaries are paid at the end of each year, what is the best option for Ben from a strictly financial standpoint?

4.            Ben believes that the appropriate analysis is to calculate the future value of each option. How would you evaluate this statement?

5.            What initial salary would Ben need to receive to make him indifferent between attending Wilton University and staying in his current position?

6.            Suppose, instead of being able to pay cash for his MBA, Ben must borrow the money. The current borrowing rate is 5.4 percent. How would this affect his decision?

According to the British United Provident Association, a major health care provider in the U.K., snoring can be an indication of sleep apnea which can cause chronic illness if left untreated. In the United States, the National Sleep foundation reports that 36.8% of the 995 adults they surveyed snored. Of the respondents, 81.5% were over the age of 30, and 32% were both over the age of 30 and snorers.

a. Are the two events of being older than 30 and “did not snore, mutually exclusive? (prove mathematically)

b. Is snoring independent of age? Explain and prove mathematically.

Pearl Corporation is a publicly traded company that follows IFRS. On December 31, 2019, Pearl’ financial records indicated the following information related to the company’s defined benefit pension plan:

On July 1, 2020, Pearl acquired the operations of Trap Ltd. As one of the conditions of the purchase, Pearl agreed that Trap’s employees would be included in Pearl’s defined benefit pension plan, and would be granted credit for the past service of Trap’s employees. The actuary estimated the value of the prior service amount granted on July 1, 2020 to be $193,000.

Pearl’ actuary provided the following information on December 31, 2020:

Prepare a pension worksheet for Pearl Corporation for the year ending December 31, 2020.
Prepare the journal entry to record the pension expense for 2020.

MBA - Managerial Economics

Explain the features of Perfect Competition with examples.

Thanks :)

Case study: Keeping Your Eye on the Ball

We sometimes read a newspaper or magazine or listen to a news report and hear about the downfall of U.S. manufacturing and how many people are losing their jobs in manufacturing plants. It sounds depressing but the question is, “Has the United States really fallen that far behind other countries in manufacturing capability?” The answer is no, and this video is meant to highlight just one example of a successful manufacturing company. There are thousands of others that could be discussed in a similar manner.

There is no doubt that U.S. manufacturers are being challenged by companies in Mexico, China, India, Brazil, Indonesia, and all over the world—but that is nothing new. The question is whether or not the United States can respond effectively to such challenges today as it has done in the past. Don’t forget that much, if not most, of the machinery and equipment being used in foreign plants, was produced in the United States. Note, too, that many companies—like Honda and Toyota—have built manufacturing plants in the United States.

This video features Ball metal beverage containers. You’ve seen them everywhere. But have you given any thought to how those cans came to be? Have you wondered why Ball has been so successful in the United States that it expanded operations by buying four U.S. manufacturing plants from brewer Anheuser-Busch InBev?

The text mentions several things that U.S. manufacturers are doing to stay competitive in today’s global markets. They include focusing on customers; maintaining close relationships with suppliers (e.g. using just-in-time inventory control); practicing continuous improvement; focusing on quality; saving on costs through site selection; utilizing the Internet, and adopting new production processes like computer-integrated manufacturing. Foreign businesses are busy copying what we do, so U.S. producers need to do things better and faster and cheaper if they can. Speaking of cans, you can see and hear what Ball is doing to stay competitive in the video. Note that Ball is using a continuous process. What other processes might the company use?

U.S. companies are using computer-aided design and computer-aided manufacturing, united in computer-integrated manufacturing. They also do flexible manufacturing, which means they can produce a variety of products using the same machinery. It should not surprise you to learn that Ball located its facilities close to its customers. That makes distribution faster, easier and cheaper.

Of course, quality is a key consideration in any manufacturing plant. Can you imagine trying to open a can and having the opener break off in your fingers or having a can that leaks all over your car? Manufacturers try for zero defects but often settle for some slightly lower standard such as Six Sigma (only 3.4 defects per million).

Next time you take a cold drink from a can, think about Ball and the other companies that make the United States a major producer of consumer goods. Think, too, of the opportunities that will present themselves to tomorrow’s college graduates. Students seem less attracted to manufacturing today, but that means more opportunities tomorrow for those students who see growth in some areas of manufacturing. That includes, of course, companies that produce solar panels, power plants, and more. You only have to look around your home or office to see the many products being made and the many products that will be made using biotechnology, nanotechnology, and so on.

1. What is the situation of manufacturers in your area/state? Are they hiring or firing more?

2. What factors affect corporation's decisions to offshore manufacturing to other countries? Do you think this is good for an economy? Why or Why Not?

3. Do you think an economic system can exist without manufacturing of goods? Explain.

How Facebook's founder aims to use his network? explain as clearly as possible!

In​ 1975, interest rates were

7.85%

and the rate of inflation was

12.3%

in the United States. What was the real interest rate in​ 1975? How would the purchasing power of your savings have changed over the​ year? ​(Note: Be careful not to round any intermediate steps less than six decimal​ places.)

Japanese auto companies manufacture cars in the United States for each of the following reasons EXCEPT ________.

Question 45 options: