2702 Words Apr 18th, 2012 11 Pages
1. Brief summary of the case
Ben Bates, 28 years old, graduated from college six years ago with a finance undergraduate degree. He is now working at the financial management company of Dewey and Louis. He expects to work for 38 years later. His goal is to become an investment banker. And he feels that an MBA degree would allow him to achieve this goal.
After examining schools, he has narrowed his choice to either Wilton University or Mount Perry College.
- The Ritter College of Business is under Wilton University: It offers the country’s leading MBA program. Its MBA degree requires two years of full-time enrollment at the university. The annual tuition is \$63,000, payable at the beginning of each school year. Books and other supplies
2.2. Question 2: What other factors, which are unquantifiable, affect Ben’s decision to pursue an MBA? Beside age - an important factor affecting Ben’s decision to get an MBA – there are also some unquantifiable factors that affect his decision, as follows: First, it is reputation of the school that Ben plans to choose. Studying at a prestigious school, his MBA degree will be more valuable. This makes it easy for Ben to find a suitable job with a more attractive salary. Second, it is the MBA program content’s suitableness for the job that Ben plans to find later. This helps Ben accumulate expertise for his future job. Third, it is the financial situation of Ben’s family, especially during his learning time. This affects his family’s ability to cover living expenses. If Ben still has a financial resource to pay for his family’s living expenses during the course, he will find it easier to decide to pursue an MBA than otherwise.
2.3. Question 3: Assuming that all wages are paid at the end of each year, then what are the best options for Ben from the precise financial standpoint?
To identify what are the best options for Ben from the precise financial standpoint, it is needed to calculate the present value (PV) of his income flow under 03 options, as follows:
2.3.1. Option 1: Ben still continues to work at Deway & Louis Company until retirement.
Factors necessary for calculating the present value (PV) in the first option are: Ben’s annual salary

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