Assume you have been accepted for a 2 year MBA program in either MIT or Harvard Business School and you have to decide which school to go to. Without taking into account name or reputation of both universities use Finance to choose which you would be "better off" at. Assume that your parents pay for tuition for either MBA you choose.

Assume tuition, living expenses, health care, room and utilities for 2 year MBA at Harvard Business School is $223,636 in total. Assume your starting annual salary including bonus after graduation in Barclays if you go to HBS will be $225,000. Afterwards your salary after 3 years will increase to

$350,000 and after 6 years to $400,000 per year due to promotions. After the 8 years you choose to retire. Rent for an apartment in New York when you work will be $3,360 per month including taxes etc.

On the other hand assume tuition, living expenses, health care, room and utilities for 2 year MBA at MIT is $241,692 in total. Assume your starting annual salary including bonus after graduation in Blackstone if you go to MIT will be $240,000. Afterwards your salary after 3 years will increase to $346,000 and after 6 years to $489,000 per year due to promotions. After 8 years you choose to retire. Rent for an apartment in New York when you work will be $3,360 per month including taxes etc.

You may assume you live forever thus use a perpetuity and no exit value. Also assume you are living in New York after graduation.

Question 1:

Produce the Expected cash flows for the next 8 years after graduation using assumptions above in terms of:

a. Costs associated with tuition fees, living expenses, health care, room and utilities during your first 2 years.

b. Estimated changes in your career after graduation

Do not forget to consider the underlying assumptions for your NOPAT, Taxes, Depreciation, Capex and Net Working Capital

Question 2

Consider a Terminal value after the 10 forecasted years. Justify.

Question 3

Consider an appropriate discount rate for your project justifying all your inputs