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P10 11 Jenny Jenks Has Researched The Financial Pros And Cons Of Entering Into A


P10-11Jenny Jenks has researched the financial pros and cons of entering into a 1-year MBA program at her state university. The tuition and books for the master’s program will have an up-front cost of $50,000. If she enrolls in an MBA program, Jenny will quit her current job, which pays $50,000 per year after taxes (for simplicity), treat any lost earnings as part of the up-front cost). On average, a person with an MBA degree earns an extra $20,000 per year (after taxes) over a business career of 40 years. Jenny believes that her opportunity cost of capital is 6%. Given her estimates, find the net present value (NPV) of entering this MBA program. Are the benefits of further education worth the associated costs?Please provide your own work. Thanks!

Answer $ Upfront costLoss of salaryExtra earning with MBA DegreeTimeCost of capitalCalculation of NPV NPV = 50000500002000040 years6% $300,925.94 Yes, the benefits of the further education…


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