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Jenny Jenks has researched the financial pros and cons of entering into a 1-year MBA program at her state university. The tuition and needed books
Jenny Jenks has researched the financial pros and cons of entering into a 1-year MBA program at her state university. The tuition and needed books for a master's program will have an upfront cost of $ 105,000. On average, a person with an MBA degree earns an extra $23,000 per year (after taxes) over a business career of 39 years. Jenny feels that her opportunity cost of capital is 6.6%. Given her estimates, find the net present value (NPV) of entering this MBA program. Are the benefits of further education worth the associated costs? The following time line depicts the cash flows associated with this problem: The net present value (NPV) of entering this MBA program is $ . (Round to the nearest dollar.) Are the benefits of further education worth the associated costs? (Select the best answer below.) No, the benefits of further education are not worth the associated costs. The net present value (NPV) of entering this MBA program is less than $0, this means Jenny will earn a return lower than her opportunity cost of capital. This decision will decrease Jenny's wealth by an amount equal to the NPV. Yes, the benefits of further education are worth the associated costs. Since the net present value (NPV) of entering this MBA program is greater than $0, Jenny will earn a return greater than her opportunity cost of capital. This decision will increase Jenny's wealth by an amount equal to the NPV
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