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Please enter the calculations correctly for each question providing step - by - step analysis. Do not use complex formula and break it down if

Please enter the calculations correctly for each question providing step-by-step analysis. Do not use complex formula and break it down if needed:
THE MBA DECISION - Please provide step-by-step calculation and make sure it's correct.
Ben Bates graduated from college six years ago with a finance undergraduate degree. Although
he is satisfied with his current job, his goal is to become an investment banker. He feels that
an MBA degree would allow him to achieve this goal. After examining schools, he has nar-
rowed his choice to either Wilton University or Mount Perry College. Although internships
are encouraged by both schools, to get class credit for the internship, no salary can be paid.
Other than internships, neither school will allow its students to work while enrolled in its MBA
program.
Ben currently works at the money management firm of Dewey and Louis. His annual
salary at the firm is $69,000 per year, and his salary is expected to increase at 3 percent per
year until retirement. He is currently 28 years old and expects to work for 40 more years. His
current job includes a fully paid health insurance plan, and his current average tax rate is
26 percent. Ben has a savings account with enough money to cover the entire cost of his MBA
program.
The Ritter College of Business at Wilton University is one of the top MBA programs in
the country. The MBA degree requires two years of full-time enrollment at the university. The
annual tuition is $75,000, payable at the beginning of each school year. Books and other sup-
plies are estimated to cost $3,600 per year. Ben expects that after graduation from Wilton, he
will receive a job offer for about $115,000 per year, with a $20,000 signing bonus. The salary
at this job will increase at 4 percent per year. Because of the higher salary, his average income
tax rate will increase to 31 percent.
The Bradley School of Business at Mount Perry College began its MBA program 16 years
ago. The Bradley School is smaller and less well known than the Ritter College. Bradley offers
an accelerated, one-year program, with a tuition cost of $90,000 to be paid upon matriculation.
Books and other supplies for the program are expected to cost $5,400. Ben thinks that he will
receive an offer of $96,000 per year upon graduation, with an $18,000 signing bonus. The
salary at this job will increase at 3.5 percent per year. His average tax rate at this level of
income will be 29 percent.
Both schools offer a health insurance plan that will cost $3,500 per year, payable at the
beginning of the year. Ben also estimates that room and board expenses will cost $2,500 more
per year at both schools than his current expenses, payable at the beginning of each year. The
appropriate discount rate is 4.7 percent.
1. How does Bens age affect his decision to get an MBA?
2. What other, perhaps nonquantifiable, factors affect Bens decision to get an MBA?
3. Assuming all salaries are paid at the end of each year, what is the best option for Ben
from a strictly financial standpoint?
4. Ben believes that the appropriate analysis is to calculate the future value of each option.
How would you evaluate this statement?
5. What initial salary would Ben need to receive to make him indifferent between attending
Wilton University and staying in his current position?
6. Suppose, instead of being able to pay cash for his MBA, Ben must borrow the money.
The current borrowing rate is 4.3 percent. How would this affect his decision?

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