1. You are 25 years old and are considering full-time study for an MBA degree. Tuition

and other direct costs will be $50,000 per year for two years. In addition, you will have

to give up a job with a salary of $45,000 per year. Assume tuition is paid and salary

received at the end of each year. By how much does your salary have to increase (in real

terms) as a result of getting your MBA degree to justify the investment? Assume a

real interest rate of 3% per year, ignore taxes, assume that the salaries for both jobs increase

at the rate of inflation (i.e. they stay constant in real terms), and that you retire at 65.