1. Opportunity Cost:

You are currently working in a money management firm earning $53,000 annually and it will increase 3% per year plus full paid health insurance. Those two will be your opportunity cost which will be included in your cost when enrolled in the MBA program since both schools wont allow you to work (both schools required you to enroll as full-time student).

Step1: Calculate the cost of MBA program for both schools including tuition, books & other supplies, health insurance, and opportunity cost. (Cash Outflow)

• FAU MBA (In-State)

  • Total estimated cost: $19,602 - $25,04

  • health insurance: 1200

• Nova MBA - Analytics

  • Total Estimated Cost: $48,524.00

  • health insurance: 1200

Step 2: Calculate the income (after you graduate, and you expect to work for 38 more years) and the decrease of the expense (which is considered as after-tax saving). Please note that we only use incremental after-tax cash flows.

• strategic management have an average early-career salary of $85,200

Step 3: Calculate net cash flows in each year.

Step 4: Use the methods we have learned from the class to make your decision (accept or reject the project). Since you will not attend both schools, the decision will be mutually exclusive.

*Remember NPV is the best method.

FAU MBA (In-State)

Total estimated cost: $25,040 (corrected)