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 his 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 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 $65,000 per year, and his salary expected to increase at 3% 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%. 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 $70,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $3000 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% per year. Because of the higher salary, his average income tax rate will increase to 31%. 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 supplies for the program are expected to cost $4,500. Ben thinks that he will receive an offer of $92,000 per year upon the graduation, with an $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%. 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 4.7%

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 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 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 $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 supplies for the program are expected to cost $4,500. Ben thinks that he will receive an offer of $92,000 per year upon graduation, with an $18,000 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 $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 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?

BK Books is an online book retailer that also has 10,000 "brick and mortar" outlets worldwide. You are a risk-neutral manager within the Corporate Finance Division and are in dire need of a new financial analyst. You only interview students from the top MBA programs in your area. Thanks to your screening mechanisms and contacts, the students you interview ultimately differ only with respect to the wage that they are willing to accept. About 10 percent of acceptable candidates are willing to accept a salary of $140,000, while 90 percent demand a salary of $190,000. There are two phases to the interview process that every interviewee must go through. Phase 1 is the initial one-hour on-campus interview. All candidates interviewed in Phase 1 are also invited to Phase 2of the interview, which consists of a five-hour office visit. In all, you spend six hours interviewing each candidate and value this time at $2,500. In addition, it costs a total of $8,000 in travel expenses to interview each candidate. You are very impressed with the first interviewee completing both phases of BK Books's interviewing process, and she has indicated that her reservation salary is $190,000. Should you make her an offer at that salary or continue the interviewing process? Explain.

BK Books is an online book retailer that also has 10,000 “bricks
and mortar” outlets worldwide. You are a risk-neutral manager
within the Corporate Finance Division and are in dire need of a
new financial analyst. You only interview students from the top
MBA programs in your area. Thanks to your screening
mechanisms and contacts, the students you interview ultimately
differ only with respect to the wage that they are willing to
accept. About 10 percent of acceptable candidates are willing to
accept a salary of $140,000, while 90 percent demand a salary
of $190,000. There are two phases to the interview process that
every interviewee must go through. Phase 1 is the initial onehour
on-campus interview. All candidates interviewed in Phase
1 are also invited to Phase 2 of the interview, which consists of
a five-hour office visit. In all, you spend six hours interviewing
each candidate and value this time at $2,500. In addition, it
costs a total of $8,000 in travel expenses to interview each
candidate. You are very impressed with the first interviewee
completing both phases of BK Books’s interviewing process,
and she has indicated that her reservation salary is $190,000.
Should you make her an offer at that salary or continue the
interviewing process? Explain.

Critically analyze, how any University should price its MBA program given its dual aim of brand building and profitability by using Pricing Strategies and Program?

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 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 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 $53,000 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 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 $58,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $2000 per year. Ben expects that after graduation from Wilton, he will receive a job offer for about $87,000 per year, with a $10,000 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 Ritter College. Bradley offers an accelerated one-year program, with a tuition cost of $75,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $4,200. Ben thinks that he will receive an offer of $78,000 per year upon graduation, with an $8,000 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 at 29%.

         Both Schools offer a health insurance plan that will cost $3,000 per year, payable at the beginning of the year. Ben has also found that both schools offer graduate housing. His room and board expenses will decrease by $4,000 per year at either school he attends. The appropriate discount rate is 5.5 percent.

Wilton MBA:

Costs:

Total direct costs = $58,000 + 2,000 + 3,000 – 4,000 = $59,000

PV of direct costs = $59,000 + 59,000 / (1.055) = $114,924.17

Salary:

PV of after-tax bonus paid in 2 years = $10,000(1 – .31) / 1.0552 = $6,199.32

After-tax salary = $87,000(1 – .31) = $60,030

Mount Perry MBA:

Cost: Total direct: $75,000 + 4,200 + 3000 – 4000 = $78,200

How to find the direct cost and salary for Mount Perry MBA?

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 school will allow its students to work while enrolled in its MBA program. Ben’s annual salary at East Coast Yachts is $61,000 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 25 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 $65,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $2,800 per year. Ben expects that after graduation from Wilton, he will receive a job offer for about $107,000 per year, with an $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 30 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 $78,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $4,000. Ben thinks that after graduation from Mount Perry, he will receive an offer of $90,000 per year, with a $17,000 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 28 percent. Both schools offer a health insurance plan that will cost $3,500 per year, payable at the beginning of the year. Ben also estimates that room and board expenses will cost $2,500 more per year at both schools than his current expenses, payable at the beginning of each year. The appropriate discount rate is 6.2 percent. Assume all salaries are paid at the end of each year.

Salary Wilton MBA Mount Perry MBA Timeline Timeline Timeline Year Value Year Value Year Value

Review the following information pertaining to Denzel Company.

1. A patent was purchased on January 2, 2018, for $39,000 when the remaining legal life was 16 years. On January 2, 2020, Denzel determined that the remaining useful life of the patent was only eight years from the date of its acquisition.
2. On January 1, 2020, Denzel Company purchased a second patent for $48,000 cash. At January 1, 2020, 6 years of the patent's legal life of 20 years had already expired.
3. On June 30, 2020, Denzel Company paid a firm $4,800 for a new trademark. Denzel considers the life of the trademark to be indefinite.
4. On November 1, 2020, Denzel Company acquired all noncash assets and assumed all liabilities of Lee Company at a cash purchase price of $72,000. Denzel determined that the fair value of the identfiable net assets acquired in the transaction is $70,200.

Note: When answering the following questions, do not round until your final answer. Round your final answer to the nearest whole number.

Required

a. What is the carrying value of intangible assets on December 31, 2020? Assume no impairment losses were recognized in prior periods.

$Answer

b. What is amortization expense for 2020?

$Answer

c. Bjorn migrated from Finland to Australia with his family. Shortly after arriving he had to return to Finland to finish a work contract that had two years remaining. Bjorn departed three weeks after arriving and settling his family in Sydney. In Finland he lived in the family house that the family lived in prior to leaving for Australia. He also used the family car for work in Finland. Although Bjorn intends to join the family in Australia for good at the end of the contract he is keeping his options open in case he can get another work contract. In the twelve months Bjorn has been back in Finland he has visited the family once in Australia for a period of one week. Is Bjorn a resident of Australia for tax purposes? Why/Why not?

You graduated college six years ago with an undergraduate degree in Finance. Although satisfied with your current job, your goal is to become an investment banker, and you wonder if an MBA degree would allow you to achieve that goal. After examining schools, you have narrowed your choice to either Wilton University or Mount Perry College. Although internships are encouraged by both schools, to get credit for the internship, no salary can be paid. Other than internships, neither school will allow students to work while enrolled on the MBA program. However, thanks to a bequest from your grandmother, your savings account has enough money to cover the entire cost of the MBA program

You currently work a money management firm, earning $53, 000 annually. Your salary is expected to increase 3% per year until retirement. You expect to work for 38 more years. Your current job includes a fully paid health insurance plan. Your current average tax rate is 26%.

The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The MBA degree requires 2 years of full-time enrollment at the university. Annual tuition is $58,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $2,000 per year. Upon graduation from Wilton you expect to receive a job offer for about $87,000 per year, with a $10,000 signing bonus. Because of the higher salary, your tax rate will increase to 31%. Annual salary increases are expected to be at 4% per year.

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 Ritter College. Bradley offers an accelerated one-year program; cost of tuition for the program is $75,000, to be paid upon matriculation. Books and other supplies are expected to cost $4,200. You think that you will receive an offer of $78,000 per year upon graduation, with an $8,000 signing bonus, resulting in an average tax rate of 29%. The salary at this job would increase 3.5% per year.

Both schools offer comparable health insurance that will cost $3,000 per year, payable at the beginning of the year. Both schools also offer graduate housing, that will result in a decrease to your current room and board expenses of $4,000 per year, whichever school you attend.

Assume the appropriate discount rate is 5.5%.

REQUIRED:

Respond to the following questions. Each response must comprise at least three complete sentences, with proper grammar and punctuation. All calculations that support your answers must be shown in their entirety. Cite any referenced materials using APA format.

1. Does your age affect your decision to get an MBA? If so, how?

2. What other, perhaps nonquantifiable, factors affect your decision to get an MBA?

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

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

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

6. Suppose that instead of being able to cover the cost of the MBA from your savings, you must borrow money. (The current borrowing rate is 5.4%) How does this affect your decision?