Assume today is March 16, 2016. Natasha Kingery is 30 years old and has a Bachelor of Science degree in computer science. She is currently employed as a Tier 2 field service representative for a telephony corporation located in Seattle, Washington, and earns $38,000 a year that she anticipates will grow at 3% per year. Natasha hopes to retire at age 65 and has just begun to think about the future.

Natasha has $75,000 that she recently inherited from her aunt. She invested this money in 30-year Treasury Bonds. She is considering whether she should further her education and would use her inheritance to pay for it.

If Natasha lacked the cash to pay for her tuition upfront, she could borrow the money. More intriguingly, she could sell a fraction of her future earnings, an idea that has received attention from researchers and entrepreneurs; see M. Palacios, Investing in Human Capital: A Capital Markets Approach to Student Funding, Cambridge University Press, 2004

She has investigated a couple of options and is asking for your help as a financial planning intern to determine the financial consequences associated with each option. Natasha has already been accepted to both of these programs, and could start either one soon.

One alternative that Natasha is considering is attaining a certification in network design. This certification would automatically promote her to a Tier 3 field service representative in her company. The base salary for a Tier 3 representative is $10,000 more than what she currently earns and she anticipates that this salary differential will grow at a rate of 3% a year as long as she keeps working. The certification program requires the completion of 20 Web-based courses and a score of 80% or better on an exam at the end of the course work. She has learned that the average amount of time necessary to finish the program is one year. The total cost of the program is $5000, due when she enrolls in the program. Because she will do all the work for the certification on her own time, Natasha does not expect to lose any income during the certification.

Another option is going back to school for an MBA degree. With an MBA degree, Natasha expects to be promoted to a managerial position in her current firm. The managerial position pays $20,000 a year more than her current position. She expects that this salary differential will also grow at a rate of 3% per year for as long as she keeps working. The evening program, which will take three years to complete, costs $25,000 per year, due at the beginning of each of her three years in school. Because she will attend classes in the evening, Natasha doesn't expect to lose any income while she is earning her MBA if she chooses to undertake the MBA.

1.Determine the interest rate she is currently earning on her inheritance by going to the U.S. Treasury Department Web site (treasury.gov) and selecting "Data" on the main menu. Then select "Daily Treasury Yield Curve Rates" under the Interest Rate heading and enter the appropriate year, 2016, and then search down the list for March 16 to obtain the closing yield or interest rate that she is earning. Use this interest rate as the discount rate for the remainder of this problem.

As of March 16, 2016 Natasha, is currently earning 2.73% for a 30-year Interest Rate according to the U.S. Treasury Department Web site (treasury.gov).

2.Create a timeline in Excel for her current situation, as well as the certification program and MBA degree options, using the following assumptions:

a.Salaries for the year are paid only once, at the end of the year.

b.The salary increase becomes effective immediately upon graduating from the MBA program or being certified. That is, because the increases become effective immediately but salaries are paid at the end of the year, the first salary increase will be paid exactly one year after graduation or certification.

3.Calculate the present value of the salary differential for completing the certification program. Subtract the cost of the program to get the NPV of undertaking the certification program.

4.Calculate the present value of the salary differential for completing the MBA degree. Calculate the present value of the cost of the MBA program. Based on your calculations, determine the NPV of undertaking the MBA.

5.Based on your answers to Questions 3 and 4, what advice would you give to Natasha? What if the two programs are mutually exclusive? That is, if Natasha undertakes one of the programs there is no further benefit to undertaking the other program. Would your advice be different?

My advice for Natasha based on the NPV results would be for Natasha to select the MBA program. The MBA program's NPV is $600,783.60 versus $352,035.77 from the certification program. If the two programs were mutually exclusive then my advice would be for her to choose the MBA program, this recommendation is based on her achieving a managerial position upon completion along with a raise of $20,000 and a 3% annual pay increase.

In the graph below, the long-run equilibrium of the aggregate economy is at point A, where the long-run aggregate supply curve (LAS) intersects the aggregate demand curve (ADO). Y* is the level of real GDP in the long-run equilibrium. The short-run equilibrium is at point B, where the short-run aggregate supply curve (SAS) intersects ADO. YO is the real GDP at point B. Pl LAS SAS P*1 PO B ADO YO Y* Y20. From the short-run equilibrium at point B, suppose the aggregate demand remains un- changed and there are no other shocks hitting the economy. The economy can adjust itself and move to the long-run equilibrium without policy intervention. Which of the following is true? A. The economy will return to the long-run equilibrium (point A), where the real GDP equals Y* and the price level is p* B. The economy will move to a new long-run equilibrium, where the real GDP equals Y * but the price level is below p*. C. The economy will move to a new long-run equilibrium, where the real GDP is above Y" and the price level is above pr. D. The economy will move to a new long-run equilibrium, where the real GDP is below Y" and the price level equals p..O the capital-labor ratio must rise. QUESTION 45 In the textbook model of endogenous growth, long-run output growth would decline if there were either a in the saving rate or a in the depreciation rate. Ofall; rise O rise; fall rise; rise Ofall; fall Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answer W27 What are the macroeconomic effects of an increase in government spending when the economy is initially at LESS THAN FULL EMPLOYMENT? You may assume that price effects dominate income effects. NGDP and RGDP decrease, interest rates decrease, the price of bonds increases, nominal and real wages decrease and the effect on consumption and investment are ambiguous. b NGDP and RGDP rise, interest rates rise, the price of bonds decrease, nominal and real wages rise, and the effect on consumption and investment are ambiguous. C. NGDP rises, RGDP rises, interest rates decline, the price of bonds increases, nominal wages rise. real wages decline and the effect on consumption and investment are ambiguous. d Nominal and Real GDP rise. Interest rates rise, price of bonds decrease, nominal wages rise, real wages decline and the effect on consumption and investment are ambiguous e. None of the above