Rodriguez just turned 48 and plans to retire on his 68 th birthday, which is December 31 st , 20 years from now. He currently
Rodriguez just turned 48 and plans to retire on his 68th birthday, which is December 31st, 20 years from now. He currently works in an office making $25,000 per year, which is paid at the end of the year (he just received a check for $25,000, just prior to this decision he needs to make). Starting January 1st of the new year, he can enter a two year MBA program that costs $55,000 per year, up front at the beginning of each of two years. In order to complete the MBA, he wont be able to work during the two years of the MBA program. However, if he completes the program, he will be promoted to a new job within the same office where he will make $40,000 per year, also paid at the end of the year (be careful, as he doesnt start working until the end of his 2nd year of school, and wont get paid his new salary until a year after that). Rodriguez's subjective discount rate is 6.3% per year. Should he get the MBA? Be very clear about how you set up the problem. Show the setup.
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