The comparative statement of financial position of Blue Spruce Corporation as at December 31, 2020, follows:

Net income of $37,900 was reported and dividends of $12,500 were declared and paid in 2020. New equipment was purchased, and equipment with a carrying value of $4,800 (cost of $11,900 and accumulated depreciation of $7,100) was sold for $8,100.

Vaughn Corp. is a medium-sized corporation specializing in quarrying stone for building construction. The company has long dominated the market, at one time achieving a 70% market penetration. During prosperous years, the company’s profits, coupled with a conservative dividend policy, resulted in funds available for outside investment. Over the years, Vaughn has had a policy of investing idle cash in equity securities. In particular, Vaughn has made periodic investments in the company’s principal supplier, Norton Industries. Although the firm currently owns 12% of the outstanding common stock of Norton Industries, Vaughn does not have significant influence over the operations of Norton Industries.

Cheryl Thomas has recently joined Vaughn as assistant controller, and her first assignment is to prepare the 2020 year-end adjusting entries for the accounts that are valued by the “fair value” rule for financial reporting purposes. Thomas has gathered the following information about Vaughn’ pertinent accounts.

Morgan Company’s balance sheet at December 31, 2019, is presented below.

During January 2020, the following transactions occurred. (Morgan Company uses the perpetual inventory system.)

Adjustment data:

Can you please help me find these answers. Thank you!!

A)Prepare journal entries for the transactions listed above and the adjusting entries.

B)Prepare an adjusted trial balance at January 31, 2020.

C)Prepare an income statement.

D)Prepare an owner’s equity statement for the month ending January 31, 2020.

E)Prepare a classified balance sheet as of January 31, 2020

As a successful entrepreneur in marketing, you are seeking an opportunity to invest in a startup business that may involve the sports industry. You just heard about a new patented product that you feel may be the opportunity you have been seeking. The product (The unique seat) was developed by Shirley and Addison Hayden after they had spend many years dragging chairs and blankets to sporting events and to the beach. The light backpack fits comfortably on the back and contains two seats, a pillow, and blanket. The pieces, held together with Velcro, easily detach from each other and the seats can be set up on a bleacher seat, on the grass, or at the beach. The seats have side connecting straps, a safety strap to connect to a bleacher seat, and can hold up to 300lbs. There are also pockets in the side of the seats to keep hands warm at a late season sporting event. The product sells for $59.49 but costs remain high because of the low production and lack of volume savings. The company is looking for investors to help with marketing and sales.

1.Would you consider investing in this company? Why or why not?

2. What are the potential markets for this product? Which market or markets provide the best opportunity?

3. What would be the major competition for this product?

Briefly summarize both the Chinese and African markets. What's happening in China's labor market and colleges and the impact on Africa. Remember: relative prices matter!

Chinese Maker of Ivanka Trump’s Shoes Looks for Cheaper Labor By KEITH BRADSHER (Links to an external site.)Links to an external site., JUNE 1, 2017 DONGGUAN, China — The Chinese factory workers who make shoes for Ivanka Trump (Links to an external site.)Links to an external site. and other designers gather at 7:40 every morning to sing songs. Sometimes, they extol worker solidarity. Usually, they trumpet ties between China and Africa, the theme of their employer’s corporate anthem. That’s no accident. With many workers here complaining about excessive hours and seeking higher pay, the factory owner wants to send their jobs to Ethiopia. The employer, Huajian International, now faces scrutiny from labor activists for how it treats workers. Chinese authorities this week detained an activist (Links to an external site.)Links to an external site. who went undercover in the company’s factory here for a labor rights group. Two other activists who worked at Huajian are missing; it’s unclear whether they were detained. Zhang Huarong, center, Huajian’s founder, singing the company’s song with employees. Credit Gilles Sabrié for The New York Times Ms. Trump’s father campaigned for the United States presidency on a platform of bringing back (Links to an external site.)Links to an external site. overseas manufacturing jobs. But deep (Links to an external site.)Links to an external site.economic (Links to an external site.)Links to an external site. and demographic shifts mean a lot of low-end work — like making shoes — doesn’t offer huge profit in China. As President Trump accuses (Links to an external site.)Links to an external site.China of stealing jobs (Links to an external site.)Links to an external site., those jobs are now leaving for other shores. Huajian, which also makes shoes for a number of American brands, was a major beneficiary of the decades-long shift of manufacturing jobs away from the United States. Global brands flocked to China to tap into the country’s cheap and willing labor pool. Today, Chinese workers are less cheap and less willing. More young people are going to college and want office jobs. The blue-collar work force is aging. Long workdays in a factory no longer appeal to those older workers, even with the promise of overtime pay. In interviews in December and again on Sunday and Monday outside Huajian’s vast industrial complex in this southern Chinese factory city, numerous workers interviewed by The New York Times complained about 14-hour days. While many liked the overtime pay, they said the days were too long, especially since they often included up to three hours of unpaid breaks for lunch and dinner. The workers insisted on anonymity for fear of retaliation by management. Shoes on a conveyor belt in Dongguan. Many Huajian workers have complained about excessive hours and are seeking higher pay. Credit Gilles Sabrié for The New York Times China Labor Watch, the advocacy group investigating the factories, said it found that employees had worked longer weeks than Chinese labor law allows, even excluding breaks. Such violations are common in Chinese factories. A Huajian spokesman, Wei Xuegang, said the company knew nothing about the activists. Asked about the accusation from China Labor Watch, he said Huajian scheduled extra hours during busy times but paid workers according to the law. In a December interview, Zhang Huarong, the company’s founder and chairman, said Huajian followed overtime laws. The Ivanka Trump brand declined to comment on the labor conditions or the activists. In terms of bringing jobs back to the United States, the company said, it was “looking forward to being a part of the conversation.” Such tensions are fueling the drive of Huajian’s founder, Mr. Zhang, to move work to Ethiopia. A former drill sergeant in the Chinese military who sometimes leads his workers on parade-ground drills, Mr. Zhang says work like making shoes will never return to the United States and is increasingly difficult in China as well. “Do Americans really like to work, to do these simple and repetitive tasks?” said Mr. Zhang, in the December interview. “Young Chinese also don’t want to do this after they graduate from college.” In many respects, China’s economy is maturing. The number of people who turn 18 each year and do not enroll in college — the group that might consider factory work — had plummeted to 10.5 million by 2015 from 18.5 million in 2000, government data shows. Because of the effects from China’s former “one child” policy, the figure is on track to fall below seven million by 2020. Costs are rising too, as the government raises minimum wages and benefits in an effort to shift China’s economy away from cheap manufacturing. Wages in Dongguan have increased ninefold since the late 1990s, Mr. Zhang said. Workers said they resented the hours, especially the unpaid breaks. One employee’s printed schedule in December showed that the factory required 60 hours and 10 minutes of paid work per week. Chinese laws require that workweeks average no more than 44 hours and limit overtime to 36 hours per month. On Monday, in the middle of China’s three-day Dragon Boat Festival holiday, throngs of workers filed into the factory. Asked whether he would be eating zongzi, the traditional rice dumpling served during the holiday, one worker replied that they don’t get to celebrate. Another said Huajian gave each worker two small dumplings and an egg for the holiday. One worker, a middle-aged woman with the surname Du, said her children had gone home to central China. Ms. Du wished for time off to celebrate, so she could make rice dumplings for them. Mr. Zhang said that his company kept working hours within legal limits, despite workers who want more overtime pay. “We cannot let them work extra hours just because they have low pay,” Mr. Zhang said in a lengthy interview in December. “We have thought about it, but we want to do business well.” Many workers have said their days were too long, especially since they often include up to three hours of unpaid breaks for lunch and dinner. Credit Gilles Sabrié for The New York Times China Labor Watch said on Tuesday that it had lost contact with three undercover activists (Links to an external site.)Links to an external site. at Huajian factories. The wife of one in the factory in Dongguan said he had been detained by the police. Li Qiang, who started China Labor Watch 17 years ago, said the group’s activists had never before been detained by the police. “I’m very worried about their safety,” he said. “The longer I’ve lost contact with them, the more I worry.” Huajian peaked at 26,000 employees in China in 2006. Staffing is now down to between 7,000 and 8,000 thanks to automation and the shift to Ethiopia, Mr. Zhang said. Huajian produces 100,000 to 200,000 pairs of Ivanka Trump shoes each year, a small fraction of the eight million pairs of shoes it produces annually. The Dongguan factory makes the heels while a second factory completes the shoes. Marc Fisher Footwear, which licenses the Ivanka Trump brand for shoes manufactured by Huijian, has said it was looking into the allegations. Mr. Zhang has had occasional brushes with Chinese labor laws, although no more than many employers in this increasingly litigious society. In 2014, Li Jianguo, a worker, sued Huajian, saying he worked 104 hours of overtime per month and was not paid for it. Huajian acknowledged in that case that the worker had been putting in 52 hours of overtime per month, according to the text of the court verdict, and agreed to pay him for that. Mr. Zhang said that workers currently earn $525 to $580 per month, including overtime pay but not including company-paid benefits like medical insurance and housing subsidies. Workers said that pay ranged from $380 to $580 per month. The money can go a long way in a factory city like Dongguan. Workers said that a 215-square-foot apartment in the neighborhood costs $29 a month to rent. The company provides a monthly housing subsidy of $11.60. A worker at the Huajian factory that produces heels for Ivanka Trump shoes, which are completed at another factory. Credit Gilles Sabrié for The New York Times Citing labor costs and the country’s foreign investment push, Huajian is building a sprawling complex of factories, office buildings and a hotel on the southern outskirts of Ethiopia’s capital, Addis Ababa. Mr. Zhang’s shoe factories there already have 5,000 employees. When finished in four years, the Addis Ababa complex will be ringed by a replica of the Great Wall of China. Some interviewed Huajian workers said they were not concerned about jobs being moved to Ethiopia, given the plentiful number of jobs in China’s southern manufacturing zone. Still, many longtime workers face age discrimination if they leave, as other factories prefer workers under 35. Shoemaking is not strenuous and poses few physical dangers, making it more appealing to older workers. “I really couldn’t get used to these long working hours at the beginning,” one worker said, “but I don’t really have a choice.”

Briefly summarize both the Chinese and African markets. What's happening in China's labor market and colleges and the impact on Africa. Remember: relative prices matter!

Chinese Maker of Ivanka Trump’s Shoes Looks for Cheaper Labor

By KEITH BRADSHER (Links to an external site.)Links to an external site., JUNE 1, 2017

DONGGUAN, China — The Chinese factory workers who make shoes for Ivanka Trump and other designers gather at 7:40 every morning to sing songs. Sometimes, they extol worker solidarity. Usually, they trumpet ties between China and Africa, the theme of their employer’s corporate anthem. That’s no accident. With many workers here complaining about excessive hours and seeking higher pay, the factory owner wants to send their jobs to Ethiopia. The employer, Huajian International, now faces scrutiny from labor activists for how it treats workers. Chinese authorities this week detained an activist who went undercover in the company’s factory here for a labor rights group. Two other activists who worked at Huajian are missing; it’s unclear whether they were detained. Zhang Huarong, center, Huajian’s founder, singing the company’s song with employees. Credit Gilles Sabrié for The New York Times Ms. Trump’s father campaigned for the United States presidency on a platform of bringing back overseas manufacturing jobs. But deep and demographic shifts mean a lot of low-end work — like making shoes — doesn’t offer huge profit in China. As President Trump accuses China of stealing jobs those jobs are now leaving for other shores. Huajian, which also makes shoes for a number of American brands, was a major beneficiary of the decades-long shift of manufacturing jobs away from the United States. Global brands flocked to China to tap into the country’s cheap and willing labor pool. Today, Chinese workers are less cheap and less willing. More young people are going to college and want office jobs. The blue-collar work force is aging. Long workdays in a factory no longer appeal to those older workers, even with the promise of overtime pay. In interviews in December and again on Sunday and Monday outside Huajian’s vast industrial complex in this southern Chinese factory city, numerous workers interviewed by The New York Times complained about 14-hour days. While many liked the overtime pay, they said the days were too long, especially since they often included up to three hours of unpaid breaks for lunch and dinner. The workers insisted on anonymity for fear of retaliation by management. Shoes on a conveyor belt in Dongguan. Many Huajian workers have complained about excessive hours and are seeking higher pay. Credit Gilles Sabrié for The New York Times China Labor Watch, the advocacy group investigating the factories, said it found that employees had worked longer weeks than Chinese labor law allows, even excluding breaks. Such violations are common in Chinese factories. A Huajian spokesman, Wei Xuegang, said the company knew nothing about the activists. Asked about the accusation from China Labor Watch, he said Huajian scheduled extra hours during busy times but paid workers according to the law. In a December interview, Zhang Huarong, the company’s founder and chairman, said Huajian followed overtime laws. The Ivanka Trump brand declined to comment on the labor conditions or the activists. In terms of bringing jobs back to the United States, the company said, it was “looking forward to being a part of the conversation.” Such tensions are fueling the drive of Huajian’s founder, Mr. Zhang, to move work to Ethiopia. A former drill sergeant in the Chinese military who sometimes leads his workers on parade-ground drills, Mr. Zhang says work like making shoes will never return to the United States and is increasingly difficult in China as well. “Do Americans really like to work, to do these simple and repetitive tasks?” said Mr. Zhang, in the December interview. “Young Chinese also don’t want to do this after they graduate from college.” In many respects, China’s economy is maturing. The number of people who turn 18 each year and do not enroll in college — the group that might consider factory work — had plummeted to 10.5 million by 2015 from 18.5 million in 2000, government data shows. Because of the effects from China’s former “one child” policy, the figure is on track to fall below seven million by 2020. Costs are rising too, as the government raises minimum wages and benefits in an effort to shift China’s economy away from cheap manufacturing. Wages in Dongguan have increased ninefold since the late 1990s, Mr. Zhang said. Workers said they resented the hours, especially the unpaid breaks. One employee’s printed schedule in December showed that the factory required 60 hours and 10 minutes of paid work per week. Chinese laws require that workweeks average no more than 44 hours and limit overtime to 36 hours per month. On Monday, in the middle of China’s three-day Dragon Boat Festival holiday, throngs of workers filed into the factory. Asked whether he would be eating zongzi, the traditional rice dumpling served during the holiday, one worker replied that they don’t get to celebrate. Another said Huajian gave each worker two small dumplings and an egg for the holiday. One worker, a middle-aged woman with the surname Du, said her children had gone home to central China. Ms. Du wished for time off to celebrate, so she could make rice dumplings for them. Mr. Zhang said that his company kept working hours within legal limits, despite workers who want more overtime pay. “We cannot let them work extra hours just because they have low pay,” Mr. Zhang said in a lengthy interview in December. “We have thought about it, but we want to do business well.” Many workers have said their days were too long, especially since they often include up to three hours of unpaid breaks for lunch and dinner. Credit Gilles Sabrié for The New York Times China Labor Watch said on Tuesday that it had lost contact with three undercover activists at Huajian factories. The wife of one in the factory in Dongguan said he had been detained by the police. Li Qiang, who started China Labor Watch 17 years ago, said the group’s activists had never before been detained by the police. “I’m very worried about their safety,” he said. “The longer I’ve lost contact with them, the more I worry.” Huajian peaked at 26,000 employees in China in 2006. Staffing is now down to between 7,000 and 8,000 thanks to automation and the shift to Ethiopia, Mr. Zhang said. Huajian produces 100,000 to 200,000 pairs of Ivanka Trump shoes each year, a small fraction of the eight million pairs of shoes it produces annually. The Dongguan factory makes the heels while a second factory completes the shoes. Marc Fisher Footwear, which licenses the Ivanka Trump brand for shoes manufactured by Huijian, has said it was looking into the allegations. Mr. Zhang has had occasional brushes with Chinese labor laws, although no more than many employers in this increasingly litigious society. In 2014, Li Jianguo, a worker, sued Huajian, saying he worked 104 hours of overtime per month and was not paid for it. Huajian acknowledged in that case that the worker had been putting in 52 hours of overtime per month, according to the text of the court verdict, and agreed to pay him for that. Mr. Zhang said that workers currently earn $525 to $580 per month, including overtime pay but not including company-paid benefits like medical insurance and housing subsidies. Workers said that pay ranged from $380 to $580 per month. The money can go a long way in a factory city like Dongguan. Workers said that a 215-square-foot apartment in the neighborhood costs $29 a month to rent. The company provides a monthly housing subsidy of $11.60. A worker at the Huajian factory that produces heels for Ivanka Trump shoes, which are completed at another factory. Credit Gilles Sabrié for The New York Times Citing labor costs and the country’s foreign investment push, Huajian is building a sprawling complex of factories, office buildings and a hotel on the southern outskirts of Ethiopia’s capital, Addis Ababa. Mr. Zhang’s shoe factories there already have 5,000 employees. When finished in four years, the Addis Ababa complex will be ringed by a replica of the Great Wall of China. Some interviewed Huajian workers said they were not concerned about jobs being moved to Ethiopia, given the plentiful number of jobs in China’s southern manufacturing zone. Still, many longtime workers face age discrimination if they leave, as other factories prefer workers under 35. Shoemaking is not strenuous and poses few physical dangers, making it more appealing to older workers. “I really couldn’t get used to these long working hours at the beginning,” one worker said, “but I don’t really have a choice.

Question 3
The Waterloo Group of Grantly and its investee companies Clo and Donte at 31 May 2020 are shown below:
Draft Income Statements for the year ended 31 May 2020
Grantly Clo Donte
R000 R000 R000
Revenue 1,138 488 149
Cost of sales (576) (214) (59)
_____ _____ _____
Gross profit 562 274 90
Other operating expenses (138) (54) (40)
_____ _____ _____
Profit from operations 424 220 50
Interest payable (38) (44) (14)
_____ _____ _____
Profit before tax 386 176 36
Taxation (54) (24) (6)
_____ _____ _____
Profit for the year 332 152 30
_____ _____ _____
Draft Statements of financial position as at 31 May 2020
Grantly Clo Donte
R000 R000 R000 R000 R000 R000
Non-current
assets
PPE 690 812 712
Investments 1,950 - -
____ ____ ____
2,640 812 712
Current
assets
Inventories 700 594 56
Receivables 1,000 180 130
Cash and
cash
equivalents 375 25 15
____ ____ ____
2,075 799 201
____ ____ ____
4,715 1,611 913
____ ____ ____
Equity
Share capital (R1
ordinary shares) 1,875 600 500
Reserves 1,125 690 160
____ ____ ____
3,000 1,290 660
Non-current
liabilities
7% Loan note 300 200 50
Current
liabilities
Trade
Payables 1,350 101 188
Taxation 65 20 15
____ ____ ____
1,415 121 203
____ ____ ___
4,715 1,611 913
____ ____ ____
Additional information
● During the year Grantly acquired a new asset with a fair value of R100,000 under a finance lease. The
lease agreement states payments of R20,000 must be paid for six years on 31 May each year, starting on 31 May 2020. At the end of the six year period legal title of the asset will pass to Grantly.
● Grantly believes the only accounting entry he must make in relation to this asset is for the R20,000 payment he has made and he has treated this as an operating expense.
● Grantly acquired 600,000 ordinary shares in Clo on 1 June 2016 for R1,550,000 when the reserves of Clo were R200,000.
● At the date of acquisition of Clo, the fair value of its property was R375,000 higher than its book value and considered to have a remaining life of 10 years.
● Grantly acquired 150,000 ordinary shares in Donte on 1 June 2019 for R400,000 when the reserves of Donte were R90,000. The fair values of assets of Donte were the same as their net book value at that date. Depreciation should be treated as an operating expense.
● Grantly manufactures a component used by Clo and Donte. Grantly sells this component at a margin of 25% and sold goods to Clo for R52,000 during the year. None of these goods had been sold by Clo at 31 May 2020. Grantly sold goods to Donte for R80,000 and Donte had sold all of these goods at 31 May 2020.
● The receivables of Grantly include R60,000 in respect of amounts owing by Clo and R35,000 in respect of amounts owing by Donte. The corresponding balances in the payables of Clo and Donte are R40,000 (Clo) and R35,000 (Donte). On 30 May 2020 Clo had sent a cheque to Grantly for R20,000.
● The impairment test on goodwill applied to Clo showed goodwill is being impaired by 10% per annum on a straight line basis. There has been no impairment for Donte.
Requirements:
(a) Prepare the calculations for the adjustments required to be made in the accounts of Grantly for the year ended 31 May 2020, to account for the finance lease in note (i). You should apply the sum of the digits method when calculating the finance cost and prepare all workings to the nearest thousand.
You should assume these calculations will have no effect on taxation.

(b) Prepare the consolidated statement of comprehensive income and consolidated statement of financial position of the Waterloo group at 31 May 2020, incorporating the calculations you have made in requirement (a) above.
Question 4
YZ is a manufacturing entity which produces and sells a range of products. YZ’s trial balance at 30 September 2020 is shown below:
Note R000 R000
Administrative expenses 910
Borrowings @ 7% per year 3,000
Buildings at cost at 30 September 2019 3,400
Cash and cash equivalents 130
Cash received on disposal of machinery (i) 8
Cost of raw materials purchased in year to 30 September 2020 2,220
Direct production labour costs 670
Distribution costs 515
Equity dividend paid 170
Equity shares R1 each, fully paid at 30 September 2020 (xi) 1,700
Income tax (viii) 30
Inventory of finished goods at 30 September 2019 (vii) 190
Inventory of raw materials at 30 September 2019 (vii) 275
Land at valuation at 30 September 2019 (ii) 9,000
Loan interest paid 210
Plant and equipment at cost at 30 September 2019 (i) 3,900
Production overheads (excluding depreciation) 710
Provision for deferred tax at 30 September 2019 (ix) 430
Accumulated depreciation at 30 September 2019:
Buildings (iii) 816
Plant and equipment (iv) 2,255
Patent (v) 526
Retained earnings at 30 September 2019 3,117
Revaluation reserve at 30 September 2019 1,800
Sales revenue 9,820
Share premium 100
Trade payables 940
Trade receivables 1,130 _____
23,986 23,986
Additional information:
i) During the year YZ disposed of obsolete machinery for R8,000. The cash received is included
in the trial balance. The obsolete machinery had originally cost R35,000 and had
accumulated depreciation of R32,000.
ii) On 30 September 2020 YZ revalued its land to R9,500,000.
iii) Buildings are depreciated at 2% per annum on the straight line basis. Buildings depreciation
should be treated as an administrative expense. No buildings were fully depreciated at 30
September 2019.
iv) Plant and equipment is depreciated at 25% per annum using the reducing balance method
and is treated as a production overhead.
v) The patent for one of YZ’s products was purchased on 1 October 2017. The patent had a
useful life of 10 years when it was purchased and is being amortised on a straight line basis
with no residual value anticipated. Amortisation of the patent is treated as cost of sales when
charged to the income statement. Research is carried out on a continuous basis to develop
the patented process and ensure that the product range continues to meet customer
demands. The patent figure in the trial balance is made up as follows:
R000
Original cost of patent 420
less amortisation to 30 September 2019 (84)
336
Research costs incurred in the year to 30 September 2020
Total
190
526
vi) YZ’s accounting policy for amortisation and depreciation is to charge a full year in the year of
acquisition and none in the year of disposal.
vii) Inventory of raw materials at 30 September 2020 was R242,000. Inventory of finished goods
at 30 September 2020 was R180,000.
viii) The directors estimate the income tax charge on the year’s profits at R715,000. The balance
on the income tax account represents the under-provision for the previous year’s tax charge.
ix) The deferred tax provision is to be reduced by R47,000.
x) YZ entered into a non-cancellable 4 year operating lease on 1 October 2019, to acquire
machinery to replace the old machinery sold. Under the terms of the lease YZ will pay no rent
for the first year. R8,000 is payable for each of 3 years commencing on 1 October 2020. The
machine is estimated to have a useful economic life of 10 years.
xi) During the year YZ issued 200,000 R1 equity shares at a premium of 50%. The total
proceeds were received before 30 September 2020 and are reflected in the trial balance
figures.
Required:
Prepare YZ’s statement of comprehensive income and a statement of changes in equity for the year to 30 September 2020 and a statement of financial position at that date, in accordance with the requirements of International Financial Reporting Standards. (All workings should be to the nearest R000).
Notes to the financial statements are not required, but all workings must be clearly shown. Do not prepare a statement of accounting policies. (Total for Question Three = 25 marks)
Total 100 marks

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?