Age is the most important factors - Free Essay Example

Sample details Pages: 3 Words: 834 Downloads: 5 Date added: 2017/06/26 Category Education Essay Type Argumentative essay Did you like this example? 1. How Does Bens Age Affect His Decision To Get An MBA? Age is one of the most important factors one has to look at when a person decides to do its master or not. At the moment, Bens annual salary of $50,000 and his current savings might be too small to prepare him for the future. Don’t waste time! Our writers will create an original "Age is the most important factors" essay for you Create order In the future Ben might require a certain amount of money to live comfortably after retiring, and this is not possible with the money he is currently receiving. In todays world a person is paid by the certificate he or she holds. With further education such as masters qualification, it would not only benefit Ben by increasing his potential to secure better position within the organization but also ultimately translates to higher income. A good MBA candidate should have an understanding of what the word â€Å"career† means these days. It means they will experience change. They should be prepared to experience employment changes, as well as moves to different fields and areas of expertise, just to survive in todays business environment. An MBA prepares a person for the transient nature of todays business world. (Veasley, 2009) It is part of most employees career goal to increase the salary that they are aerning and with a Masters qualification, such goals can be realized effe ctively. Graduates working instead of pursuing their MBA can later want to further their education; they say education has no end. If Ben does not decide to do his MBA now he has a choice to do it later after gaining some work experience. Some people feel that doing an MBA without work experience makes it more difficult to understand because that work experience makes them know a little about business world and thus enhance their knowledge from there. Continue Aith Current Job (No Further Studies) Year 0 Year 1 Year 2 Year 3 Year 36 $37,000 $38,110 $39,253.3 $40,430.9 $104,112.91 Growing annuity PV= C PV (salary) = $37,000 c = Annual salary x (1- tax rate) = $ 50,000 x (1- 0.26) r = Discount rate= 0.065 = $ 37,000 g = Constant salary growth = 0.03 = $ 728,896.23 t = Number of years = 35 Ben will able to earn the amount of $728,896.23 in the future provided that he continues with the current job without further studies. Wilton University Year 0 Year 1 Year 2 Year 3 Year 4 Year 36 PV $102,500 $102,500 $65,550 $68,172 $239,151.38 Annual Direct Costs = Annual tuition + books and other supplies + health insurance plan Annual Direct Costs = $60,000 + $2,500 + $3,000 = $65,500 PV = R + R PV (direct costs) = $65,500 + 65,500 R = Annual direct costs r = 0. 065 = $127,002.35 = $65,500 n = 2 If Ben studies in Ritter College of Business at Wilton University, he will use $127,002.35 to study the MBA program that requires two years. Growing annuity PV (indirect costs) = C= Annual salary x (1- tax rate) r = Discount rate = 0.065 = $50,000 x (1- 0.26) g = Constant salary growth = 0.03 = $37,000 t = Number of years = 2 PV (indirect costs) = $37,000 = $ 68,341.82 PV (total costs) = PV (direct costs) + PV (indirect costs) = $127,002.35 + $68,341.82 = $195,344.17 $195,344.17 is the opportunity cost of Ben if he chooses to study in The Ritter College of Business at Wilton University. Growing annuity PV3 (salary) = C PV3 (salary) = $65, 550 C = $95,000 x (1- 0.31) r = 0.065 = $1,424,719.73 = $ 65,550 g = 0.04 t = 35-2 =33 FV = NVP = PV (salary) PV (total costs) $1424, 719.73 = PV = $1,256,117.38 $195,344.17 PV (salary) = $1,256,117.38 = $1,060,773.21 Ben will able to earn the amount of $1,060,773.21 in the future provided that he chooses to continue his MBA programs in The Ritter College of Business at Wilton University. Mount Penny College Year 0 Year 1 Year 2 Year 3 Year 4 Year 36 PV $118,500 $55,380 $57,318.3 $59,324.44 $178,371.25 Annual direct costs = Tuition costs + books and other supplies + health insurance plan Annual direct costs = $75,000+ $3,500 + $3,000 = $81,500 PV (direct costs) = R + R R = annual direct costs = $81,500 n= number of years = 1 r = discount rate = 0.065 PV (direct costs) = $81,500 + $81,500 = $81,500 If Ben studies in Bradley School of Business at Mount Perry College, he will use $81,500 to study the MBA program that requires one year. Growing annuity PV (indirect costs) = C x C = annual salary x (1 tax rate) g = constant salary growth = 0.03 = $50,000 x (1 0.26) t = number of years = 1 r = discount rate = 0.065 PV (indirect costs) = $37, 000 = $34,741.78 PV (total costs) = PV (direct costs) + PV (indirect costs) = $81,500 + $34, 741.78 = $116,241.78 $116,241.78 is the opportunity cost of Ben if he chooses to study in Bradley Scho ol of Business at Mount Perry College. Growing annuity PV2 (salary) = C PV2 (salary) = $55,380 C = $78,000 x (1- 0. 29) g = 0.035 = $1, 147,257.88 = $55, 380 t = 35 1= 34 r = 0.065 FV = NVP = PV (salary) PV (total costs) FV = $1, 147,257.88 = $1, 077,237.45 $116,241.78 r = 0.065 t = 1 = $960,995.67 $1,147,257.88 = PV PV (salary) = $1,077,237.45 Ben will able to earn the amount of $960,995.67 in the future provided that he chooses to continue his MBA programs in Bradley School of Business at Mount Perry College. Conclusion The best option for Ben from a strictly financial standpoint is option 2 where he chooses to study in The Ritter College of Business at Wilton University for MBA programs for two years full time programs. This is because Ben can earn the net amount of $1,060,773.21 in the future and it is the highest among the 3 option. Ben would gain an additional $331,877.33 of income compared to his current employment. It is also better tha n Mt. Perrys return by $99,780.91. From a financial sense, although Ben would spend an additional year enrolled in the university, in the long run, it would provide him with better total return. Refrences Veasley. D, (2009). What makes a good MBA candidate? https://www.gradview.com/articles/graduatestudies/mba_advantages.html