User Account

All Pages

Benefits of further education worth the associated costs

Assignment Help Financial Management
Reference no: EM131049002

Long-term investment decision, NPV method Jenny 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?

Reference no: EM131049002

Questions Cloud

Probability that project will achieve at least that level : Hy-tec Communication has calculated the return on assets (ROA) for one of its projects using a simulation method. By simulating the operations 1,000 times, they obtained an ROA of 16.7 percent and a standard deviation of 6.2. The results of the simul..
Two mutually exclusive projects-cash flow : Mahjong, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$36,900 –$36,900 1 19,260 6,760 2 14,760 13,260 3 12,260 19,760 4 9,260 23,760. If the required return is 15 percent, what is the NPV for..
What is required return on greens equity after restructuring : Green Manufacturing, Inc., plans to announce that it will issue $1.91 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a coupon rate of 7 percent. Green is currently an all-equity firm worth $..
Sells extended warranties for durable consumer goods : Internal rate of return Peace of Mind, Inc. (PMI), sells extended warranties for durable consumer goods such as washing machines and refrigerators. A consumer who purchases the 2-year warranty will pay PMI $200. On average, the repair costs that PMI ..
Benefits of further education worth the associated costs : Long-term investment decision, NPV method Jenny 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. Are ..
Long-term investment decision-payback method : Long-term investment decision, payback method Bill Williams has the opportunity to invest in project A that costs $9,000 today and promises to pay annual end-ofyear payments of $2,200, $2,500, $2,500, $2,000, and $1,800 over the next 5 years. How lon..
Hypothetical information system project : What about your project led you to choose this methodology - What other development methodologies did you consider?
Macroeconomic issue about unemployment of malaysia : Write the macroeconomic issue about unemployment of Malaysia, the answer should explain why this issue happened, the impact of this issue (good influence and bad influence), must add the reference to support your explanation, please write this ans..
Know the memory hierarchy and why it so useful : Know the memory hierarchy and why it so useful. Explain how data is stored on a magnetic disk (track, cylinder, platter, sector). Explain how data is retrieved from a magnetic disk.

Reviews

Write a Review

Financial Management Questions & Answers

  Equally weighted portfolio of these three stocks

Consider the following information: Rate of Return if State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom 0.62 0.09 0.17 0.35 Bust 0.38 0.20 0.10 − 0.06 a. What is the expected return on an equally weighted port..

  Use of equity and debt can be used for funding

The use of equity (both common an preferred stock) and debt can be used for funding. In addition, here is another good follow up question Referring to the components and the calculation of the cost of capital and the weighted average cost of capital,..

  Your investment is now worth

Two years ago, you invested $1,000 in a healthcare stock. Your return during the first year was -50 percent, while your return in the second year was +50 percent. Your investment is now worth $1,000.

  Expected return and standard deviation

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 3.0%. Expected return and Standa..

  Piping hot food services is evaluating capital budgeting

Piping Hot Food Services (PHFS) is evaluating a capital budgeting project that costs $75,000. The project is expected to generate after-tax cash flows equal to $26,000 per year for four years. PHFS's required rate return is 14 percent. Compute the pr..

  Cost of new common stock-depending on taxes-flotation costs

The cost of retained earnings can be less than, equal to, or greater than the cost of new common stock, depending on taxes, flotation costs, investors’ attitudes, etc. If a company uses the same discount rate to evaluate all projects,

  Shareholders in form of share repurchases and dividends

PDQ Corporation is forecast to have total earnings of $1 billion next year and to pay out a total of 25% of these earnings to shareholders in the form of share repurchases and dividends. PDQ Corporation has 100 million shares outstanding. Its earning..

  Assume the firms target capital structure

Assume the firm's target capital structure is 60 percent equity and 40 percent debt with after tax costs of 18% and 10.5% respectively. Assume the following cash follows: CF0 = -$1,000, CF1 = $700, CF2 = $700. What is the NPV?

  Calculate the finance charge and monthly payment

Zachary Porter of Highland Heights, Kentucky, is contemplating borrowing $10,000 from his bank. The bank could use add-on rates of 6.5 percent for 3 years, 7 percent for 4 years, and 8 percent for 5 years. Use Equation 7.1 to calculate the finance ch..

  What are the major weaknesses of this financial plan

As a financial consultant you are helping a client who just won a fortune in Las Vegas, plan his retirement. He plans to deposit his newly won fortune in his bank today (January 1, 2016) in a savings account that pays 5% interest compounded annually...

  Value of the common stock-investors require a rate of return

Gilliland Motot, Inc., paid a $4.46 dividend last year. If Gilliland's return on equity is 31%, and its retention rate is 31%, what is the value of the common stock if the investors require a rate of return of 18%?

  What is the future worth of this investment

Aerotron Electronics is considering the purchase of a water filtration system to assist in circuit board manufacturing. The system costs $60,000. It has an expected life of 7 years at which time its salvage value will be $7,500. Operating and mainten..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd