Reference no: EM132591097

Personal Investment Analysis

Find of the cost of a bachelor's degree at the university of your choice assume additional costs of $16,000 for an additional fifth year of education to get Master's degree. Assume that all tuition is paid at the beginning of the year. A student considering this investment must evaluate the present value of cash flows from possessing a graduate degree versus holding only the undergraduate degree. Assume that the average student with an undergraduate degree is expected to earn an annual salary of $55,000 per year (assumed to be paid at the end of the year) for 10 years. Assume that the average student with a graduate Masters degree is expected to earn an annual salary of $76,000 per year (assumed to be paid at the end of the year) for nine years after graduation. Assume a minimum rate of return of 10%.

Question 1: Determine the net present value of cash flows from an undergraduate degree.

Question 2: Determine the net present value of cash flows from a Masters degree, assuming that no salary is earned during the graduate year of schooling.

Question 3: What is the net advantage or disadvantage of pursuing a graduate degree under these assumption?