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The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The MBA degree requires 2 years of
The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The
MBA degree requires years of fulltime enrollment at the university. Annual tuition is $ payable
at the beginning of each school year. Books and other supplies are estimated to cost $ per year.
Upon graduation from Wilton you expect to receive a job offer for about $ per year, with a
$ signing bonus. Because of the higher salary, your tax rate will increase to Annual salary
increases are expected to be at per year.
The Bradley School of Business at Mount Perry College began its MBA program years ago. The
Bradley School is smaller and less well known than Ritter College. Bradley offers an accelerated one
year program; cost of tuition for the program is $ to be paid upon matriculation. Books and
other supplies are expected to cost $ You think that you will receive an offer of $ per year
upon graduation, with an $ signing bonus, resulting in an average tax rate of The salary at
this job would increase per year.
Both schools offer comparable health insurance that will cost $ per year, payable at the beginning
of the year. Both schools also offer graduate housing, that will result in a decrease to your current room
and board expenses of $ per year, whichever school you attend.
Assume the appropriate discount rate is
REQUIRED:
Respond to the following questions. Each response must comprise at least three complete sentences,
with proper grammar and punctuation. All calculations that support your answers must be shown in
their entirety. Cite any referenced materials using APA format.
Does your age affect your decision to get an MBA? If so how?
What other, perhaps nonquantifiable, factors affect your decision to get an MBA?
Assuming all salaries are paid at the end of each year, what is your best option from a strictly
financial standpoint?
A friend suggests that the appropriate analysis is to calculate the future value of each option.
How would you evaluate this statement?
What initial salary would you need to receive to make you indifferent between attending Wilton
University and staying in your current position?
Suppose that instead of being able to cover the cost of the MBA from your savings, you must
borrow money. The current borrowing rate is How does this affect your decision?
Source: Fundamentals of Corporate Finance, Ross,e: McGrawHill Publications
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