Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

CP 26-4 Personal investment analysis for a service company A Masters of Accountancy degree at Central University costs $12,000 for an additional fifth year of

image text in transcribed
CP 26-4 Personal investment analysis for a service company A Masters of Accountancy degree at Central University costs $12,000 for an additional fifth year of education beyond the bachelor's degree. Assume that all tuition is paid at the be- ginning of the year. A student considering this investment must evaluate the present value of cash flows from possessing a graduate degree versus holding only the undergraduate degree. Assume that the average student with an undergraduate degree is expected to earn an annual salary of $50,000 per year (assumed to be paid at the end of the year) for 10 years. Assume that the average student with a graduate Masters of Accountancy degree is expected to earn an annual salary of $66,000 per year (assumed to be paid at the end of the year) for nine years after graduation. Assume a minimum rate of return of 10%. 1. Determine the net present value of cash flows from an undergraduate degree. Use the present value table provided in this chapter in Exhibit 5. 2. Determine the net present value of cash flows from a Masters of Accountancy degree, assuming that no salary is earned during the graduate year of schooling. 3. What is the net advantage or disadvantage of pursuing a graduate degree under these assumptions

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost management a strategic approach

Authors: Edward J. Blocher, David E. Stout, Gary Cokins

5th edition

73526940, 978-0073526942

More Books

Students also viewed these Accounting questions

Question

Discuss the objectives of discipline and appeals systems

Answered: 1 week ago