Your supervisor has a client named Christina Brown. Christina is $30$ years old and has a Bachelor of Science degree in computer science. She is currently employed as a Tier $2$ field service representative for a telephony corporation in Buffalo, New York, and earns $$80,000$ a year, which she anticipates will grow at $3\mathrm{.}5\%$ per year. Christina hopes to retire at age $65$ and has just begun to think about the future.

Christina also has $$110,000$ that she recently inherited from her aunt. She plans to invest this money in a $5-$year certificate of deposit $($CD$)$ account at her local bank. She is also considering whether to further her education and use her inheritance to pay for it$.$ Christina could borrow the money if she does not want to use her inheritance to pay her tuition upfront.

Your supervisor has investigated a couple of options for Christina and is asking for your help determining the financial consequences of each option. $($Christina has already been accepted to the two programs below and could start either one soon.$)$

One alternative for Christina is attaining a certification in network design. This certification would automatically promote her to a Tier $3$ field service representative in her company. The base salary for a Tier $3$ representative is $$12,000$ more than what she currently earns, and she anticipates that this salary differential will grow at a rate of $3\mathrm{.}5\%$ a year as long as she keeps working. The certification program requires the completion of $20$ web$-$based courses and a score of $80\%$ or better on an exam at the end of the course work. She has learned that the average time to finish the program is one year. The program's total cost is $$6,500,$ due when she enrolls. Because she will do all the work for the certification on her own time, Christina does not expect to lose any income during the certification.

Another option is going back to school for an MBA degree. With an MBA degree, Christina expects to be promoted to a managerial position in her current firm. The managerial position pays $$24,000$ a year more than her current position. She expects this salary differential will grow at $3\mathrm{.}5\%$ per year as long as she keeps working. The evening program, which will take three years to complete, costs $$53,000$ per year, due at the beginning of her three school years. Because she will attend classes in the evening, Christina doesn$$t expect to lose any income while earning her MBA if she chooses to undertake the MBA.

$1.$ Determine the interest rate Christina can earn on her inheritance and find the rate offered on a $5-$year certificate of deposit $($CD$).$ Use this interest rate as the discount rate for the remainder of your analysis. Your supervisor recommended using Google to search for an appropriate $5-$year certificate of deposit $($CD$)$ in a Buffalo, New York bank.

$2.$ Create a timeline in Excel for her current situation $($today until retirement$),$ as well as the certification program and MBA degree options, using the following assumptions:

Salaries for the year are paid only once, at the end of the year.

The salary increase becomes effective immediately upon graduating from the MBA program or certification. In other words, because the increases become effective immediately, but salaries are paid at the end of the year, the first salary increase will be paid exactly one year after graduation or certification.

$3.$ Calculate the salary differential's present value $($PV$)$ for completing the certification program. That is$,$ subtract the program's cost to calculate the net present value $($NPV$)$ of undertaking the certification program.

$4.$ Calculate the PV of the salary differential for completing the MBA degree. Calculate the PV of the cost of the MBA program. Based on your calculations, determine the NPV of undertaking the MBA.

$5.$ Based on your answers to Questions $3$ and $4,$ what advice would you give Christina? Should she do both programs? What if the two programs are mutually exclusive? That is$,$ if Christina undertakes one of the programs, there is no further benefit to undertaking the other program. Would your advice be different?