Long-term investment decision, NPV method Jenny Jenks has researched the financi

Question

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 needed books for a master's program will have an upfront cost of $103,000. On average, a person with an MBA degree earns an extra $21,000 per year (after taxes) over a business career of 37 years. Jenny feels that her opportunity cost of capital is 58%. Given her estimates, find the net present value NPV of entering this MBA program. Are the benefits of further education worth the associated costs? The following time line depicts the cash flows associated with this problem: 37 Tuition (CFo) $103,000 Extra eanings $21,000 $21,000$21,000 ts The net present value (NPV) of entering this MBA program is S(Round to the nearest dollar.)

Explanation / Answer

Using Financial calculator CF0= -103000 Cf1= 21000 F01= 37 Press NPV Interest= 5.8 NPV= $214,109.45

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