Kim is 40 years old and earns $72,000 annually today with expected 2 percent annual raises. She is considering taking a year off next year before returning to school for two years to earn a graduate degree. She will have to tale a leave her current job to do this and will not be employed anywhere else during this period. Her tuition and school expenses will be $52,000 annually. After graduation, Kims salary (at a new firm) is expected to rise to $100,000 with 2.5 percent annual raises on salary. She also expects to receive a signing bonus of $15,000 with the new job. Assume all figures are after tax. 1. If Kim expects to retire at age 64, what is the NPV of her cash flows between now and retirement? Assume she can earn 7 percent on any investments?

2. Would Kim have been better off staying at her job (she will not take a year off nor get a graduate degree in this case). Explain, after showing all relevant calculations.