Person B has completed his graduation six years ago with an undergraduate degree in finance. His aim was to be an investment banker; however, he is satisfied with his present job. He was searching for the best college to do an MBA program, which he thinks would assist him in achieving his aim. He was looking for University W and College M. The details of his current job and his course details are provided. Characters in the case: Person B University W College M Company DL College R College M School B Adequate information: If person B remains at the current job, then the present value of his after tax salary is $1,044,728.37. The present value of the direct cost if Person B joins University W is $151,377.23. The present value of the after tax bonus that is paid in two years from the salary if he joins University W is $12,212.72. To calculate: The initial salary that Person B has to get to make him different in attending University W and staying in his current position.

Question

Want to see the full answer?

Answer 1

Question

Chapter 4, Problem 5MC

Summary Introduction

Case summary:

Person B has completed his graduation six years ago with an undergraduate degree in finance. His aim was to be an investment banker; however, he is satisfied with his present job. He was searching for the best college to do an MBA program, which he thinks would assist him in achieving his aim. He was looking for University W and College M. The details of his current job and his course details are provided.

Characters in the case:

Person B

University W

College M

Company DL

College R

College M

School B

Adequate information:

If person B remains at the current job, then the present value of his after tax salary is $1,044,728.37.

The present value of the direct cost if Person B joins University W is $151,377.23.

The present value of the after tax bonus that is paid in two years from the salary if he joins University W is $12,212.72.

To calculate: The initial salary that Person B has to get to make him different in attending University W and staying in his current position.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Treasury securities are issued and backed by the U.S. government and, therefore, are considered to be the lowest-risk securities on the market. As an investor looking for protection against inflation, you are considering the purchase of inflation-adjusted bonds known as U.S. Treasury Inflation-Protected Securities (TIPS). With these securities, the face value (which is paid at maturity) and the bond interest rate (which is paid semiannually) is regularly adjusted to account for inflation. However, for this problem only, assume the semi-annual interest payment (called the bond dividend) remains the same. You purchased a 10-year $10,000 TIPS bond with dividend of 4% per year payable semiannually (i.e., $200 every 6 months). Assume there is no inflation adjustment for the first 5 years, but in years 6 through 10, the bond face value increases by $850 each year. You use an expected investment return of 11% per year compounded semiannually. NOTE: This is a multi-part question. Once an…

Nataro, Incorporated, has sales of $698,000, costs of $344,000, depreciation expense of $89,000, interest expense of $54,000, and a tax rate of 21 percent. What is the net income for this firm? Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32. Net income

Greenland is a small country with only listed stocks on its stock exchange. Using the following data create a market capitalisation index. Stock Price on Index Creation Number of Shares issued Day $45 300 B $70 500 C $18 600 D $11 900 If the value of the stock index is set at 100 on the index creation date, what will be the value of the index when stock prices are the following: Stock A Stock Price $35 B $78 C $15 D $9