16. Timothy is currently pursuing a financial planning degree with a 100% performance scholarship at Campbellsville University. After graduation, if he expects to earn the following (cash flows) estimated salary, what is his future earnings projection in today's dollars (net present value of his expected salary)? (Assume an inflation rate of 5.5% as of April 5th, 2023). 18. Time Cash Flow Timeline Cash Flow Year 1 $0 17. Timothy is contemplating returning to school to get an MBA (Master of Business Administration). He anticipates that it would take him two years to get his MBA, and the program would cost $10,600 per year in books and tuition (payable each year). After graduation, Timothy anticipates that he will be able to earn approximately $10,000 more per year with the MBA compared to having a Bachelor's degree. Based on the following cash flows, what is his future earnings in today's dollars with a Master's degree? (Assume an inflation rate of 5.5% as of April 5th, 2023). Year 1- 5 $50,000 Year 2 $0 Year 6- 10 Year 11- Year 16- Year 21- 15 20 45 $55,000 $65,000 $75,000 $95,000 Year 3-5 $60,000 Year 6-10 $70,000 Year 11-15 $85,000 Year 16-20 $95,000 Year 21-45 $125,000 Based on the net present value of Timothy's future earnings calculations in 16 & 17, should he consider attending graduate school?
16. Timothy is currently pursuing a financial planning degree with a 100% performance scholarship at Campbellsville University. After graduation, if he expects to earn the following (cash flows) estimated salary, what is his future earnings projection in today's dollars (net present value of his expected salary)? (Assume an inflation rate of 5.5% as of April 5th, 2023). 18. Time Cash Flow Timeline Cash Flow Year 1 $0 17. Timothy is contemplating returning to school to get an MBA (Master of Business Administration). He anticipates that it would take him two years to get his MBA, and the program would cost $10,600 per year in books and tuition (payable each year). After graduation, Timothy anticipates that he will be able to earn approximately $10,000 more per year with the MBA compared to having a Bachelor's degree. Based on the following cash flows, what is his future earnings in today's dollars with a Master's degree? (Assume an inflation rate of 5.5% as of April 5th, 2023). Year 1- 5 $50,000 Year 2 $0 Year 6- 10 Year 11- Year 16- Year 21- 15 20 45 $55,000 $65,000 $75,000 $95,000 Year 3-5 $60,000 Year 6-10 $70,000 Year 11-15 $85,000 Year 16-20 $95,000 Year 21-45 $125,000 Based on the net present value of Timothy's future earnings calculations in 16 & 17, should he consider attending graduate school?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:Time
Cash Flow
18.
16. Timothy is currently pursuing a financial planning degree with a 100% performance
scholarship at Campbellsville University. After graduation, if he expects to earn the
following (cash flows) estimated salary, what is his future earnings projection in today's
dollars (net present value of his expected salary)?
(Assume an inflation rate of 5.5% as of April 5th, 2023).
Timeline
Cash Flow
Year 1
$0
Year 1-
5
Year 6-
10
$50,000 $55,000
17. Timothy is contemplating returning to school to get an MBA (Master of Business
Administration). He anticipates that it would take him two years to get his MBA, and the
program would cost $10,600 per year in books and tuition (payable each year). After
graduation, Timothy anticipates that he will be able to earn approximately $10,000 more
per year with the MBA compared to having a Bachelor's degree. Based on the following
cash flows, what is his future earnings in today's dollars with a Master's degree?
(Assume an inflation rate of 5.5% as of April 5th, 2023).
Year 2
$0
Year 11-
15
20
$65,000 $75,000
Year 3-5
$60,000
Year 16- Year 21-
45
$95,000
Year 6-10 Year 11-15 Year 16-20.
$70,000 $85,000 $95.000
Year 21-45
$125,000
Based on the net present value of Timothy's future earnings calculations in 16 & 17,
should he consider attending graduate school?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education