$.$ What is the maximum amount you would pay for an asset that generates an income of $$250,000$ at the end of each of five years if the opportunity cost of using funds is $8$ percent?

$2.$ What is the value of a preferred stock that pays a perpetual dividend of $$120$ at the end of each year when the interest rate is $3$ percent?

$3.$ It is estimated that over $100,000$ students will apply to the top $30$ MBA programs in the United States this year.

a$.$ Using the concept of net present value and opportunity cost, explain when it is rational for an individual to pursue an MBA degree.

b$.$ What would you expect to happen to the number of applicants if the starting salaries of managers with MBA degrees remained constant but salaries of managers without such degrees decreased by $20$ percent? Why?