The factors to consider are: Signing bonus = $ 18,000 G (Growth rate) = 0% T (the number of period working) = 39 So the FV is = $ 18,000

By calculate the future value of each option: The present value of his salary $ 4 4 , 4 0 0 is equal to future value $ 1 4 4 ,4 0 0 when keeping his current work for 40 years. The present value of salary $ 7 5 , 9 0 0 is equal to future value $ 336,905.94 plus $ 20,000 signing bonus when having a job for 38 years after getting the MBA at Wilton University. The present value of salary $ 65,320 is equal to future value $ 249,873.28 plus $18,000 signing bonus when having a job for 39 years after getting the MBA at Mount Perry College. The best choice is he having an amount highest is $75,900 today and taking $ 336,905.94 at the end of 38 times periods. Meaning he has to study at Wilton University today with cost him $73,000 today which would end up giving him $336,905.94 plus $20,000 signing bonus for 38 equal time periods. 5. What initial salary would Ben need to receive to make him indifferent between attending Wilton University and staying in his current position? Staying in his current position, PV 1 = $935,283.49 Getting the MBA at Wilton University, PV2 = $ 1,804,927.68 When PV1=PV2 21,06C1 = $75,900 * 23,78 21, 06 C1 = $ 1,804,927.68
C1 = $85,683.96

The amount $ 85,683.96 already deducted with 26% taxed, the salary before tax deduction is $ 107,961.78. So, the initial salary would Ben need

to receive to make him indifferent between attending Wilton University and Staying in his current position is $ 1 0 7 , 9 6 1 . 7 8 6. Suppose, instead of being able to pay cash for his MBA, Ben must borrow the money. The current borrowing rate is 5.4%. How would this affect his decision?
There are two options: 1. Getting the MBA from Wilton University

Ben Bates must borrow $146,000 to get the MBA at the Wilton University for two years. The current borrowing rate is 5, 4%. Assuming he pay out the principal plus interest every year for five years: Loan amount : $146,000 Interest rate : 5, 4% Long term : 5 Loan payment : $ 34.096,06 Amortization table 1.0:
beginning balance total payment interest paid principal paid ending balance

1 146.000,00 34.096,06

7.884,00 26.212,06 119.787,94 2 119.787,94 34.096,06 6.468,55 27.627,51 92.160,43 3 92.160,43 34.096,06 4.976,66 29.119,40 63.041,04 4 63.041,04 34.096,06 3.404,22 30.691,84 32.349,19 5 32.349,19 34.096,06 1.746,86 32.349,20 (0,01)
Totals 170.480,30 24.480,28 146.000,01

The total payment in five years is $170.580,30. Then, when we calculated the present value with discount rate 6,5% and period five years: C = $170.580,30 R (discount rate) = 6, 5% T (the number of period) = 5 So the PV is = $ 708,875.80

2. Getting the MBA from Mount Perry College

Ben Bates must borrow $ 89,500 to get the MBA at the Mount Perry College for one year. The current borrowing rate is 5, 4%. Assuming he pay out the principal plus interest every year for five years: Loan amount : $89,500 Interest rate : 5, 4% Long term : 5 Loan payment : $ 20.901,35
Amortization table 1.1: beginning balance total payment interest paid principal paid ending balance

1 89.500,00 20.901,35 4.833,00 16.068,35 73.431,65 2 73.431,65 20.901,35 3.965,31

16.936,04 56.495,61 3 56.495,61 20.901,35 3.050,76 17.850,59 38.645,02 4 38.645,02 20.901,35 2.086,83 18.814,52 19.830,50 5 19.830,50 20.901,35 1.070,85 19.830,50 0,00
Totals 104.506,75 15.006,75 89.500,00

The total payment in five years is $104.506,75. Then, when we calculated the present value with discount rate 6,5% and period five years: C = $104.504,75 R (discount rate) = 6, 5% T (the number of period) = 5 So the PV is = $ 434,293.44 From the table 1.0, the total payment is 1 7 0 . 4 8 0 , 3 0 is equal with present value $
708,875.80. From table 1.1, the total payment is 104.506,75 is equal with

present value $ 434,293.44. These will affect his decision to continue study. From strictly

financial standpoint, if Ben must borrow the money with current rate 5,4%, he is still can continue the study at Wilton University. Another alternative is that if he is not continue the study, Ben need to receive an initial salary around $ 1
0 7 . 9 6 1 , 7 8

to make him indifferent between attending Wilton University and staying in his current position