Assume a student is planning to pursue a two-year master’s degree. There are two educational options the student is considering, with investment and cash flows as follows. Option A: Full-Time Education Example cash investment: $100,000. Currently the student is earning $30,000. The student will quit his/her current job to study a Master’s degree in computer science. Upon graduation the student hopes to earn $60,000 per year in new job. Option B: Part-Time Education Example cash investment: $100,000. Currently the student is earning $30,000. The student can work part-time for three years at a salary of $20,000 while studying towards the master’s degree in project management. Upon graduation the student anticipates a possible increase in salary by $10,000 (total $40,000) in the same company. The requirements for the assignment are: • Answer the following questions based on the unit readings:
Briefly describe what net present value is, how it is calculated, and what it is used for.
Calculate the NPV for each educational option. The discount rate is 8%.
Which option should the student choose? Explain your decision including any necessary assumptions made.
Our customer support team is here to answer your questions. Ask us anything!
