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P.9.1 [10 points total] Becky works in sales but is considering quitting work for two years to earn a master of business administration (MBA). Her

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P.9.1 [10 points total] Becky works in sales but is considering quitting work for two years to earn a master of business administration (MBA). Her current job pays $90,000 per year (after taxes), but she could earn $130,000 per year (after taxes) if she had an MBA. For simplicity, assume neither of these grow over time. Tuition is $70,000 per year. The cost of an apartment near campus is equal to the $20,000 per year that she is currently paying, so she can ignore it in her comparisons. Becky's discount rate is 6 percent per year. She just turned 48 and plans to retire when she turns 60, whether or not she gets her MBA. Given this information, should she go to school to earn her MBA? Use an approach based on present value, and explain carefully, with specific numbers to back up your remarks. [Assume that the current year, which is not discounted, is her 48th. Becky can go to school in her 48th and 49th year, paying tuition each year, and then earn an MBA and then the higher earnings stream. Or she can stick with earning from sales. She will retire after her 59th year.]

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