1) Figure out which "stage" NPV you want to run (e.g.

, Two Stage NPV---this is an example; you can use whichever stage model you prefer)
2) Copy the tab (i.e., worksheet) for the Two Stage NPV
a.) the Two-Stage NPV tab
b.) Select "move or copy"
c.) Check the box, "create a copy"
d.) Click OK
3) You will now have two identical tabs for the Two-Stage NPV. On one of the sheets, run your information through selecting "part-time program,"
and on the other sheet, select "full-time program."
4) To determine which makes the most financial sense, review the NPV information in each of the tabs from the tables that are titled "MBA" and
starts in cell F14.
How to determine if you should attend a part-time or full-time MBA program
OK, so it's not for me to decide if you should do NYU's part-time program or Wharton's full-time program. The program that makes the most
sense given your career goals is up to you to decide. What I can do though, is help determine the cost-benefit analysis of giving up two years of
your salary, versus staying in the workforce and going through a three-year part time program. I was considering making a seperate
tool/calculator for this, but I didn't want to get complicated. Here are the directions that I recommend following if you want to compare whether or
not you should do a full-time or a part-time MBA program
3) If you feel like that you would transition to jobs soon/later, feel free to adjust accordingly.
The True Value of *YOUR* MBA (v. 2.0)
3) The models assume that tuition is paid in the year that you attend school. I realize this is an unrealistic assumption for almost everybody. Most
of us will be taking out student loans and paying them back over the course of 5, 10, or even 30 years. However, I chose to do it this way,
because again, it is the conservative approach (makes your NPV and payback time for the MBA route look worse). Feel free to adjust your
model accordingly if wish to do so. For example, if you are going into investment banking, you could say that your tuition is $0 (or you can choose
to plug in your living expenses---again your choice) and you will pay back $20,000 in year 1, $30,000 in year 2, and $50,000 in year 3. You can
make a manual adjustment in the cell for post-MBA year 1 by tacking on a "-25000" to the formula. You would then adjust post-MBA years 2 and
3 accordingly.
Created by ryguy904 2008
For my friends at GMATClub
Single Stage Assumptions
Two Stage Assumptions
5) Discount rate is just a fancy-pants finance term. It basically means that a dollar today is worth more than a dollar tomorrow. Conversely, a
dollar tomorrow is worth less than a dollar today. Don't believe me? Would you rather have $150,000 today or $150,000 one year from now.
Good! So now you're with me! Don't be freaked out (or overly excited) about seeing a salary in 2020 of $250,000. It's not the same as $250,000
in today's terms. I don't know what the exact discount rate should be, but I'd say that it should be in the range of 3-10%. 3% would be a more
"aggressive approach" meaning that time factor is not as sensitive and future compensation "means more" (i.e., has more value) in the
calculations. 10% would be extremely conservative. I'd choose something like 4-7% to be the most realistic.
4) If you are matriculating in 2010, 2011, or another year, simply change the dates accordingly. My base assumption is for folks matriculating in
2009.
1) For the non-MBA model, your current compensation will continue to grow at the same rate for two years (i.e., you will be in the job for three
years). It is assumed that you will receive a new/better/higher-paying job based on work experience and increased responsibilities at the
beginning of 2012. After that, your compensation will grow at the same rate until the end of time.
2) For the MBA model, your compensation upon graduation will continue to grow at the same rate until the end of time.
2) For the MBA model, your post-MBA compensation will continue to grow at the same rate for three years (i.e., you will be in your post-MBA job
for a total of four years). It is assumed that you will receive a new/better/higher-paying job at the beginning of 2015. After that, your
compensation will grow at a constant rate for another two years (i.e., you will be in your second post-MBA job for a total of three years). After
that, you will receive another new/better/higher-paying job at the beginning of 2018, at which point your compensation will grow at the same rate
until the end of time.
1) For the non-MBA model, your current compensation will continue to grow at the same rate for two years (i.e., you will be in your current job for
three years). It is assumed that you will receive a new/better/higher-paying job based on work experience and increased responsibilities at the
beginning of 2012. After that, your compensation will grow at a constant rate for another three years. After that, it is assumed that you will
receive a new/better/higher-paying job based on increased work experience and job responsibilities at the beginning of 2016. After that, your
compensation will grow at the same rate until the end of time.
Three Stage Assumptions
1) For the non-MBA model, your current compensation will continue to grow at the same rate until the end of time.
3) If you feel like that you would transition to jobs soon/later, feel free to adjust accordingly.
2) For the MBA model, your post-MBA compensation will continue to grow at the same rate for three years (i.e., you will be in your post-MBA job
for a total of four years). It is assumed that you will receive a new/better/higher-paying job at the beginning of 2016. After that, your
compensation will grow at the same rate until the end of time.
1) Compensation upon graduation will be 50% in your first year. This assumes that you work from July - December in the year that you graduate.
Again, your situation may be that you wish to go on vacation for three months and "utilize" your signing bonuses and instead start in September.
Feel free to adjust accordingly.
5) I'm human, so if you find any errors, let me know and I'll correct them.
6) If you don't want to have your compensation go up by X% per year, you can manually type in your expected compensation in the appropriate
year(s). The NPV and breakeven formulas will still calculate accordingly. Bear in mind, this may overwrite other formulas, which you will have to
recreate (or open the original document) if you want to get those back.
7) Part-time programs. There is a drop-down box that allows you to choose the program that you are interested in. If you are interested in the
part-time program, you will then need to enter in your current salary and this will be used accordingly to offset your tuition (which again, I assumed
is being paid upfront). I assumed that part-timers would not have an internship during school and also that they would not receive a signing bonus
upon graduation like full-timers usually do.
General Assumptions
6) Feel free to adjust any of the assumptions. I wanted to create a footprint that you could change as much as you like.
2) Assumptions are that you will not have any compensation in the year of matriculation. I realize this is completely unrealistic, but I did this for two
reasons. a) Some folks are short-timing it four months prior to school ( I won't name names), while others take a week off before starting. b) This
brings about a more conservative approach in the calculation (if you don't make any manual adjustments) in terms of when you will "breakeven."
Being a conservative guy, I chose this as the default method. Have I mentioned that you can adjust things if you prefer to do so??
4) You can also include living expenses in the cell marked tuition/fees. I chose not to, since I have an S.O. that will be "helping" me with this. My
living expenses will remain (somewhat) the same whether I'm in school or not. I won't be eating at the same restaurants, or for that matter eating
out as much, but I'll still be consuming. Furthermore, I chose to show compensation as gross compensation (not net of housing, food, living
expenses, taxes, etc.).
1) Fill in the yellow cells. Excel will do the rest!
3) Keep in mind, this is not designed to be exact to the nearest penny. The more time that I spent creating this, the more complex the tool started
to become (for instance, I was thinking that you could choose different growth rates for your salary and your bonus--ultimately I opted for a simpler
"total compensation" growth rate). I didn't want to get too crazy or too intricate where it became hard for people to follow with more than a simple
set of directions. I thought that if I had some solid data entry placeholders, you could tweak things as you thought appropriate for your given
situation. All of the formulas are there for you to play with, tweak, and adjust. If you have any questions on how to make changes based on your
circumstances, let me know.
A couple of notes on how this spreadsheet works
2) You can choose to run either the single stage, two stage, or three stage NPV models (or all three!). It's just a matter of how intricate you want
to get with running scenarios.

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Cash flows $80,000 $82,000 $84,050 $86,151 $88,305 $90,513 $92,775 $95,095 $97,472 $99,909 $102,407 $104,967 $107,591
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Cash flows -$45,000 -$30,000 $80,000 $125,400 $131,043 $136,940 $143,102 $149,542 $156,271 $163,303 $170,652 $178,331 $186,356
Current Salary Salary/Bonus Growth Rate
2010 1-YR NPV $158,846 2010 1-YR NPV -$73,846 False 80,000 $ 2.5%
2011 2-YR NPV $236,555 2011 2-YR NPV $118 False
2012 3-YR NPV $313,143 2012 3-YR NPV $111,598 False
2013 4-YR NPV $388,627 2013 4-YR NPV $223,615 False
2014 5-YR NPV $525,213 2014 5-YR NPV $336,169 False
2015 6-YR NPV $536,343 2015 6-YR NPV $449,265 False
2016 7-YR NPV $608,608 2016 7-YR NPV $562,905 False
2017 8-YR NPV $679,830 2017 8-YR NPV $677,090 False Full-Time or Part-Time? Salary (if Part-Time MBA)
2018 9-YR NPV $750,024 2018 9-YR NPV $791,825 True Full-Time 65,000 $
2019 10-YR NPV $819,207 2019 10-YR NPV $907,112 True
2020 11-YR NPV $887,391 2020 11-YR NPV $1,022,952 True Internship Compensation (total) Signing Bonus
2021 12-YR NPV $954,592 2021 12-YR NPV $1,139,350 True 15,000 $ 20,000 $
Post-MBA
Yearly tuition/fees 45,000 $ Starting Salary/Bonus Salary/Bonus Growth Rate
120,000 $ 4.5%
Discount rate 4.0%
2012
2013
2014
2015
2016
2017
2018
2019
MBA
MBA
4 Years After Graduation
3 Years After Graduation
2 Years After Graduation
1 Year After Graduation
Value of an MBA
Year
Year
No MBA
2018 Breakeven Year 7 Years After Graduation
MBA
No MBA
No MBA
6 Years After Graduation
7 Years After Graduation
8 Years After Graduation
5 Years After Graduation
2020
2021 or later 10 Years+ After Graduation
9 Years After Graduation
Stage 1
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Cash flows $65,000 $68,250 $71,663 $85,000 $87,975 $91,054 $94,241 $97,539 $100,953 $104,487 $108,144 $111,929 $115,846
School School School Stage 1
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Cash flows -$45,000 -$30,000 $80,000 $127,800 $136,107 $144,954 $170,000 $175,950 $182,108 $188,482 $195,079 $201,907 $208,973
Current Salary/Bonus Stage 1 Salary/Bonus Growth Rate
2010 1-YR NPV $130,625 2010 1-YR NPV -$73,846 False 65,000 $ 5.0% (2010 - 2011)
2011 2-YR NPV $196,881 2011 2-YR NPV $118 False
2012 3-YR NPV $272,446 2012 3-YR NPV $113,732 False Year 4 (2012) Salary/Bonus Stage 2 Salary/Bonus Growth Rate
2013 4-YR NPV $347,647 2013 4-YR NPV $230,077 False 85,000 $ 3.5% (2013-2021)
2014 5-YR NPV $471,237 2014 5-YR NPV $349,218 False
2015 6-YR NPV $496,967 2015 6-YR NPV $483,572 False
2016 7-YR NPV $571,089 2016 7-YR NPV $617,280 True
2017 8-YR NPV $644,855 2017 8-YR NPV $750,344 True Full-Time or Part-Time? Salary (if Part-Time MBA)
2018 9-YR NPV $718,266 2018 9-YR NPV $882,769 True 65,000 $
2019 10-YR NPV $791,324 2019 10-YR NPV $1,014,558 True
2020 11-YR NPV $864,030 2020 11-YR NPV $1,145,712 True Internship Compensation (total) Signing Bonus
2021 12-YR NPV $936,388 2021 12-YR NPV $1,276,236 True 15,000 $ 20,000 $
Post-MBA
Yearly tuition/fees 45,000 $ Starting Salary/Bonus Stage 1 Salary/Bonus Growth Rate
120,000 $ 6.5% (2012 - 2015)
Discount rate 4.0%
Year 5 (2016) Salary/Bonus Stage 2 Salary/Bonus Growth Rate
170,000 $ 3.5% (2016-2021)
5 Years After Graduation
2012
2013
2014
2015
2016
MBA
No MBA MBA
Stage 2
Stage 2
Value of an MBA
Year
Year
No MBA
4 Years After Graduation
2 Years After Graduation
1 Year After Graduation
MBA
Breakeven Year
No MBA
5 Years After Graduation
3 Years After Graduation
2016
2017
2018
2019
2020
2021 or later 10 Years+ After Graduation
6 Years After Graduation
7 Years After Graduation
8 Years After Graduation
9 Years After Graduation
Stage 1
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Cash flows $65,000 $66,950 $68,959 $85,000 $89,250 $93,713 $98,398 $125,000 $129,375 $133,903 $138,590 $143,440 $148,461
School School School Stage 1 Stage 2
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Cash flows -$45,000 -$30,000 $80,000 $127,200 $134,832 $160,000 $167,200 $174,724 $182,587 $200,000 $206,000 $212,180 $218,545
Current Salary/Bonus Stage 1 Salary/Bonus Growth Rate
2010 1-YR NPV $129,375 2010 1-YR NPV -$73,846 False 65,000 $ 3.0% (2010 - 2011)
2011 2-YR NPV $193,131 2011 2-YR NPV $118 False
2012 3-YR NPV $268,696 2012 3-YR NPV $113,199 False Year 4 (2012) Salary/Bonus Stage 2 Salary/Bonus Growth Rate
2013 4-YR NPV $344,987 2013 4-YR NPV $228,454 False 85,000 $ 5.0% (2013-2015)
2014 5-YR NPV $470,781 2014 5-YR NPV $359,962 False
2015 6-YR NPV $499,777 2015 6-YR NPV $492,103 False Year 8 (2016) Salary/Bonus Stage 3 Salary/Bonus Growth Rate
2016 7-YR NPV $594,767 2016 7-YR NPV $624,878 True 125,000 $ 3.5% (2017-2021)
2017 8-YR NPV $689,300 2017 8-YR NPV $758,293 True
2018 9-YR NPV $783,379 2018 9-YR NPV $898,810 True
2019 10-YR NPV $877,005 2019 10-YR NPV $1,037,976 True Full-Time or Part-Time? Salary (if Part-Time MBA)
2020 11-YR NPV $970,181 2020 11-YR NPV $1,175,804 True 65,000 $
2021 12-YR NPV $1,062,909 2021 12-YR NPV $1,312,307 True
Internship Compensation (total) Signing Bonus
15,000 $ 20,000 $
Yearly tuition/fees 45,000 $
Post-MBA Starting Salary/Bonus Stage 1 Salary/Bonus Growth Rate
Discount rate 4.0% 120,000 $ 6.0% (2012 - 2014)
Year 4 (2015) Salary/Bonus Stage 2 Salary/Bonus Growth Rate
160,000 $ 4.5% (2016 - 2017)
Year 8 (2018) Salary/Bonus Stage 3 Salary/Bonus Growth Rate
200,000 $ 3.0% (2019 - 2021)
2012
2013
2014
2015
2016
MBA
MBA
4 Years After Graduation
3 Years After Graduation
Breakeven Year
Value of an MBA
Year
Year
No MBA
No MBA
MBA
Stage 3
Stage 2 Stage 3
No MBA
2016 5 Years After Graduation
2 Years After Graduation
1 Year After Graduation
5 Years After Graduation
2017
2018
2019
2020
2021 or later
8 Years After Graduation
9 Years After Graduation
10 Years+ After Graduation
6 Years After Graduation
7 Years After Graduation