Ian received an undergraduate degree in finance fouryears ago and has been employed all this time at a mid-size wealth management company.His initial salary was $65,000 per year and increased 4.0% every year. Ian decided that hisfour-year stint at this employer has prepared him well for an MBA degree. He applied toseveral schools and was accepted by one of the top-10 programs in the county. Ian notifiedhis manager about his decision yesterday, but today the manager made him the followingoffer: Ian will be assigned to lead a very important project with immediate salary increase of10%. The manager assured him that for the following four years his annual raise will be atleast 5%. Ian is planning to make his decision (quit and go to school or stay and lead theproject) based on the cumulative earnings in the next 20 years (no discounting and ignoringtaxes). He plans to stop working in exactly 20 years regardless of his decision and become agentleman farmer.

a. Build a spreadsheet with Ian's cash flows for the next 20 years and calculatecumulative earnings for two scenarios: (1) stay and lead the project and (2) enrollinto MBA program; assume the following: Ian estimates that the two-year MBAprogram will cost $100,000 per year in tuition and other expenses; his starting salaryafter MBA is expected to be $120,000 and will grow 3.0% per year, the same growthrate that Ian expects his salary will grow at his current employer after the 5% raisesare over. What scenario should Ian pick?

b. What should the immediate adjustment to his current salary be to make Ianindifferent between two scenarios? (Hint: use solver function in Excel)