Closing Case on MBA Decision Case Study

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decision to enter an MBA program should take into account a number of factors. The financial part of the evaluation essentially takes into the expected improvements in earnings, and weighs these against the cost of the program. This is basically an NPV calculation. Therefore, Ben's age is a factor, because the younger he is, the more years of earning he will have. By accelerating his career path at a younger age, Ben will also have a higher ceiling.

There are a number of nonquantifiable factors that Ben would take into account. His family situation is one consideration. The MBA program will require a significant investment in his time and energy, not to mention money. The degree to which his family (if he has one) can bear losing his time, attention and earnings will have an impact on his ability and desire to pursue an MBA.

In order to determine the best decision from a strictly financial viewpoint, an NPV calculation for each option will need to be conducted.

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Assuming a discount rate of 6.5% and 40 years of working, Ben would have an NPV of after-tax earnings of $779,403.

The first MBA to take into consideration is the Wilton MBA. This has a net present value of $1,170,548. The second MBA to take into consideration is the Mount Perry MBA, which has a net present value of $1,089,084. If the decision is strictly financial, then Ben should sign up for the Wilton MBA, because it has the highest net present value.

4. Ben is incorrect that calculating the future value is the best option. He might be thinking that the present value is just the discounted future value, but that not the best way to look at the situation. The NPV calculation takes….....

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