Instead of taking an education sabatical, you opt for a part$-$time MBA, which would take you $4$ years to complete. This would allow you to continue to work. During those $4$ years you will earn $$60,000$ per year. However, if yo complete the MBA, when you return you will receive a $30\%$ raise. You don't have to lose $2$ years of earnings to get a part$-$time MBA, but there are other costs to studying parttime: Less time with family and friends, etc. Also, since you are going

Solution $12$

to retire in $10$ years, you only have $6$ years to enjoy the increase in earnings. Cost of capital remains $10\%.$

A$)$ Assuming the new salary bump at the end of the MBA will be enjoyed for the remaining $6$ years $($in $10$ you retire$)$ you plan to work, what is the value of the MBA to you in today's dollars?

B$)$ If you consider the additional bonus as compensation for the time you invested studying for the MBA during the $4$ year period, how much is the value of the MBA to you per year over that $4$ year loeriod?