Assignment
Develop a three- to five-page analysis (excluding the title and reference pages) on the projected return on investment for your college education and projected future employment. This analysis will consist of TWO parts.
Part 1: Describe how and why you made the decision to pursue an MBA. In the description, include calculations of expenses and opportunity costs related to that decision.
Part 2: Analyze your desired occupation. Determine how much compensation (return) you expect to earn and how long will it take to pay back the return on this investment. Use the financial formulas, Net Present Value (NPV), Internal Rate of Return (IRR), and Payback, provided in Chapters 3 and 4 of your text.
The analysis should be comprehensive and reference specific examples from a minimum of TWO scholarly sources, in addition to your text!
Text THAT SHOULD ALSO BE ONE OF THE SOURCES FOR PAPER is:
Byrd, J., Hickman, K., & McPherson, M. (2013). Managerial Finance [Electronic version]. Retrieved from https://content.ashford.edu/
Additional information given from instructor is as follows:
Assignment Instructions:
If your educational costs are waived, you will still need compute the fully cost for your MBA, and the incremental cash inflow for the following Pre-MBA salary - Post MBA salary and use the capital budgeting techniques to solve for NPV,IRR and Payback Period.
Here is an example -
College education direct cost is $40,000, (Solving for NPV) - My present salary is $50,000 without the degree; my new salary will grow to $70,000 with the degree- my incremental revenue ($70k - $50k = $20K- include all raises) NPV = Initial investment or cost is -$40,000, revenues should be factor in its after-tax value (1-tax rate) [ $50,000 x 1-.25 = $37,500 - $52,500 - incremental cash inflow $15,000 after-taxes (70,000 x 1 - .25= $52,500)]; Time period five years, discount rate or opportunity cost 6% = NPV
-$40,000 (15,000/1.06^1 + 15,000/1.06^2, +15,000/1.06^3 +, 15,000/1.06^4+, 15,000/1.06^5 or $15, 000 x 4.212= $63,180 - $40,000 = $23,180 NPV positive. IRR $40,000 / $15,000 = 2.6667 (Present value of annuity table IRR 25%-26%; Payback period cost / cash flow $40,000 / $15,000 = 2.6667 or 2.67 years. (You can use online IRR, NPV, or Excel )