Salary differential for completing the certification program

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Natasha is 30 years old and currently employed as a Tier 2 field service representative for a telephony corporation and earns $38,000 a year that she anticipates will grow at 3% per year. Natasha has $75,000 that she inherited from her aunt. she invited this money in 10 years Treasury Bond. She is considering wither she should further her education and would use her inheritance to pay for it. She was investigating a couple of options and is asking for your help as a financial planning intern to determine the financial consequences associated with each option. Natasha has already been accepted to two programs and could start either one soon. One alternative is attaining a certification in network design. This certification would automatically promote her to a Tier 3 field service representative. The base salary for a Tier 3 representative is $10,000 more than the salary of a Tier 2 representative, and she anticipates that this salary differential will grow at a rate of 3%for as ling as she remains employed. The certification program. The average amount of time to finish the program is 1 year. The total cost of the program is $5,000 du when she enrolls in the program. Natasha does not expect to lose any income duting the certification program. Another option is going back to school for an MBA degree. With an MBA degree Natasha expects to be promoted to a manager position in her current firm. The managerial position pays $20,000 a year more than her current position. She expects that the salary differential will also grow at a rate of 3% per year as long as she keeps working. The program will take 3 years to complete, costs $25,000 per year due at the beginning of each of her three year in school. Natasha does not expect to lose any income while she is in school. Questions: 1) Following the instructions in Ch4 case, what is Natasha's discount rate when she tries to make a decision to pursue more training/education? The discount rate is 1.54 ( I fount it on the financeyahoo.com and is the correct one..so far is the only correct answer that I got) 2) What is the present value of the salary differential for completing the certification program? 3) What is the net present value of undertaking the certification program? (You subtract the cost of the program from the answer in the previous question to get the net present value). 4) What is the present value of the salary differential for completing the MBA degree? 5) What is the net present value of undertaking the MBA? (You subtract the cost of the program from the answer in the previous question to get the net present value).

Reference no: EM13980856

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