Your 18 year old friend is considering what to do with their working life until they retire at age 65. They've sought your advice. For simplicity, ignore taxes and assume that wages will be paid annually in arrears and will be constant (zero growth). The abbreviation 'k' (Greek kilo) means thousands, so 1k is 1000. Let the present be time zero (te0) and the year of retirement is time 47 (t=47). Your friend is deciding between: Studying a human resources (HR) bachelor degree at university for 3 years, costing $10k at the start of each year (3 cash outflows at t=0, 1 & 2), then beginning work as a HR professional for $70k pa (44 annual payments from t-4 to 47 inclusive); . Working as a HR Junior administrator for $40k pa for 5 years (5 annual payments from t=1 to t=5), then doing a masters course in HR for 2 years costing $10k at the start of each year (2 cash outflows at t=5 and 6), then work as a HR professional for $70k over the next 40 years until retirement (40 annual payments from t=8 to 47 inclusive); . You estimate that the required return is 5% pa with either career, and that they're equally risky and enjoyable. The cash flows are shown in the table. Which of the following statements is NOT correct? Comparing the two alternatives, completing a bachelor degree now compared to a masters degree later: (a) First 5 years incremental cash flows starting from time zero are -10k, -50k, -50k, -40k, 30k,... (b) Payback period is 6 years. (c) NPV is $18.366k. (d) IRR is more than the required return. (e) This project has regular incremental cash flows so there will be just one IRR. Career Choices and Cash Flows Work, then Bachelor Time degree then work 0 1 2 3 4 5 6 7 8 9 *** 47 -10 -10 FORRRRRR IR -10 70 70 70 70 70 70 70 masters degree, then work again 0 3990820088 18 40 40 40 40 -10 70 70 70