11. Elizabeth will graduate with a bachelor's degree in business administration in May 2023. She is considering caming an MBA degree and specializing in accounting because the MBA will bring more job opportunities. The master's degree requires two years of training, so Elizabeth would not graduate with her Master's degree until May 2025. She knows that most of her friends who have graduated recently with bachelor degrees are starting jobs that pay an average of $48,000 the first year, $50,000 the next year, and $52,500 the following year. Tuition and fees for the Master's program cost $22,000 per year. Once Elizabeth has her twoyear MBA degree she expects to eam about $68,000 per year as a research analyst. a) What are the fotal costs of receiving the first year of training in the MBA program (you do not have to find the present value for this question)? b) (continued from question above) Elizabeth will be finished with her undergraduate degree in May 2023 and would complete the first year of the MBA program August 2023 to May 2024 and the second year of the MBA program August 20214 to May 2025. Consider the first year of the degree program to be one year in the future (n−I) and the second year of the program to be two years in the future (n=2). If she decides to complete the MBA degree, what is the present value of the total casts she would incur over these two years? Assume a 5% interest rate. c) (continued from questions above) If Elizabeth completes the Master's program in May 2025, she will begin her career as a rescarch analyst three years in the future. Today, what is the present value of the future benefits of being a research analyst with a MBA (based on benefits in the first year she is employed)? Assume a 5% interest rate. d) (continued from questions above) What is the rate of return to the two-year Master's degree? 12. (continued from questions above) Based on the rate of return to the two-year Master's degree, would you recommend to Elizabeth that she complete the two-year Master's degree? Answer yes or no and explain your answer.
