Implementation strategy of Ashland University MBA program

Strategic Planning and Business Policy

1. survey of the MBA students at a university in the United States classified the country of origin of the students as seen in the table.

1. What percent of all MBA students were from North America?

2. What percent of the Two-year MBA students were from North America?

3. What percent of the evening MBA students were from North America?

4. What is the marginal distribution of origin?

1. Using the table below, calculate the variance of X, variance of Y, standard deviation of X, standard deviation of Y, the covariance between X and Y, the correlation coefficient between X and Y, and find the regression line assuming X is the independent variable (find the slope and the intercept). Show your work.

Problem #8

Among 300 employees in a company 100 had Engineering degree, 110 had MBA degree, and 70 had both Engineering and MBA degrees. If an employee from this company is selected at random, find the probability that the employee

a. Has Engineering degree but not MBA..

b. Engineering or MBA degree.

John Ross graduated from college 6 years ago with a finance undergraduate degree. Although he is satisfied with his current job, his dream is to become an investment banker. To become an investment banker, he would need to take an MBA degree. He is, thus, looking for colleges. After some time, John has narrowed his choice to Brandeis University, Carlton College, or Northeastern University. Both schools allow and encourage internships. However, the Northeastern University will allow students to work while enrolled in a MBA program.

I will describe below the four alternatives that John Ross can evaluate as of today.

Alternative (1)

He can keep his current job at the management firm D&L. His annual salary at the firm is $65,000 per year and is salary is expected to increase at 3% per year until retirement. He is currently 28 years old and he expects to work for 40 more years. His current job includes a full paid health insurance plan and is current average tax rate is 26%. Ben has a savings account with enough money to cover the entire cost of the MBA program.

Alternative (2)

The MBA program at Brandeis University requires two years of full-time enrollment at the university. The annual tuition is $70,000. Books and other supplies are estimated to cost $3,000 per year. John expects that after graduation from Brandeis University he will receive a job offer of $110,000 per year with a signing bonus of $20,000. The expected salary will increase at 4% per year. Because of the higher salary, the average income tax rate will be 31%.

Alternative (3)

The Carlton College offers a one-year program. The tuition cost is $85,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $4,500. John thinks that after the Carlton degree he will be able to receive an offer of $92,000 per year with a $18,000 signing bonus. The salary at this job will increase at 3.5% per year. His average tax rate at this level of income will be 29%.

Alternative (4)

Northeastern University offers a two-years program. The annual tuition is $90.000. Northeastern allows students to work while enrolled in the MBA program. After some research, John has found out that he can potentially work for his marketing professor as research assistant. The annual stipend for this position at Northeastern University is $25,000 for the first year and $27,000 for the second year. Books and other supplies are estimated to cost $2,000 per year. John expects that after graduation from Northeastern University he will receive a job offer of $85,000 per year with a signing bonus of $10,000. The expected salary will increase at 2% per year for the first 10 years. The growth rate will be 4% thereafter. The average income tax rate is 30%.

All schools offer a health insurance plan that will cost $3,000 per year. John also estimates that room and board expenses will cost $2,000 more per year at all schools than his current expenses. The appropriate discount rate is 6.3%.

Determine the NPV for each of the four alternatives.

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 Wilton University. Although internships are encouraged by the school, to get class credit for the internship, no salary can be paid. Other than internships, the school will not 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 $65,000 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 40 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 26 percent. Ben has a 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 $70,000, payable at the beginning of each school year. In addition, books and other supplies are estimated to cost $3,000 per year, payable at the beginning of each year. Ben expects that after graduation from Wilton, he will receive a job offer for about $110,000 per year, with a $20,000 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 school offers 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 $2,000 more per year than his current expenses, payable at the beginning of each year. The appropriate discount rate is 4.7 percent.

Question: Assuming all salaries are paid at the end of each year, what is the best option for Ben — remaining at his current job or pursuing an MBA —from a strictly financial standpoint?

There have been several recent cases of a CEO or CFO resigning or being ousted for misrepresenting academic credentials. For instance, during February 2006, the CEO of RadioShack resigned by “mutual agreement” for inflating his educational background. During 2002, Veritas Software Corporation’s DFO resigned after claiming to have an MBA from Stanford University. On the other hand, Bausch & Lomb Inc.’s board refused the CEO’s offer to resign following a questionable claim to have an MBA.

Suppose you have been retained by the board of a company where the CEO has ‘overstated’ credentials. This company has a code of ethics and conduct which states that the employee should always do “the right thing.”

(a) What is the board of directors’ responsibility in such matters?

(b) What arguments would you make to ask the CEO to resign? What damage might be caused if the decision is made to retain the current CEO?

THE MBA DECISION

Ben Bates graduated from college six years ago with a finance undergraduate degree. Since graduation, he has been employed in the finance department at East Coast Yachts. 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 or 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 schools 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 $65,000 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 40 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 26 percent. Ben has a 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 $70,000 , payable at the beginning of each school year. Books and other supplies are estimated to cost $3,000 per year. Ben expects that after graduation from Wilton, he will receive a job offer for about $110,000 per year , with a $20,000 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 $85,000 , to be paid upon matriculation. Books and other sup- plies for the program are expected to cost $4,500. Ben thinks that after graduation from Mount Perry, he will receive an offer of $92,000 per year , with a $18,000 signing bonus The salary at this job will increase at 3.5 percent per year. His average income 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 $2,000 more per year at both schools than his current expenses, payable at the beginning of each year. The appropriate discount rate is 6.3 percent.

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

2. What other, perhaps non-quantifiable 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 that 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 to get an MBA?

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?

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 Wilton University. Ben currently works at the money management firm. His annual salary at the firm is $65,000 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 40 more years. His current average tax rate is 26 percent. Ben has a savings account with enough money to cover the entire cost of his MBA program. The MBA degree at Wilton University requires two years of full-time enrollment at the university. The annual tuition and other supplies cost $78,000, payable at the beginning of each school year. Ben expects that after graduation from Wilton, he will receive a job offer for about $110,000 per year and work for 38 years. 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 appropriate discount rate is 6.5 percent. Assuming all salaries are paid at the end of each year, what is the best option for Ben—from a strictly financial standpoint?