Every person is born with a different mindset and thinking in this world, and on the basis of this mindset and thinking, they will take different aspects accordingly. On the basis of the mindset, an individual will select a desired career for them. The clearest intentions behind selecting and addressing a particular career depends upon the fact that how much future benefit it will give or arise for the individual in particular (Peterson, Fabozzi & Habegger, 2004). The aspect of return on Investment (ROI) is the most important aspect that strides under the analysis of development or pursuing a career. In this particular assignment, it is required to apply the financial techniques on the case of an individual, who is wishing to make a career in Finance. There are two parts of the assignment, depending on the personal behavior particularly.
Part-1
I have strong inclination towards joining an industry wherein the functions and operations of financial management would have been done accordingly (Shapiro, 1992). From the commencement of my career, I would like to follow things through charts, econometrics and economic models. I would like to have a Masters in Finance Degree, because I am willing to join the financial and investment industry as a Financial Analyst. I have an idea that it will be an expensive degree; however the yield or output of this degree would be highly effective. In this assignment, it is required to apply the concept of Capital Budgeting, like Net Present Value (NPV), Internal Rate of Return (IRR), Payback and Accounting Rate of Return (ARR) of the education I get. The cost and expense function that will be taken into consideration for the entire study is as follows
It will be a 3 years Degree, and the total cost that will be required to pursue this degree will be $ 244,000 for three years. There is no loan associated with the initial cost.
Part-2
This part of the research deals particularly with the capital budgeting stance. It is required to have a return cash inflow for the analysis, on which basis the concept of capital budgeting can be applied. There are four different tools which will be used in this analysis:
Net Present Value: It is an important capital budgeting tool that is used to value the future cash flow on the present value succession. If the NPV is in positive, then it is an indemnity that the present value is positive and effective. High NPV is a guarantee of effectiveness for the companies, and it is equally applicable on this particular aspect as well
Internal Rate of Return: The current discounting rate is 12%, and through the IRR it will be analyzed what should be the discounting rate, so the future value of cash would become Zero.
Payback Periods: It will analyze the number of years, during which the initial cost of tuition will be paid back accordingly in both of the scenarios like discounted cash flow and undiscounted cash flow. It is again an important indicator and capital budgeting tool used by the companies and it will be used in this particular section as well.
Accounting Rate of Return: The rate of return (ROR) that associated with the initial investment in particular is known as Accounting Rate of Return, and it is an important indicator for the project management, and even in this scenario as well.
The computation of all of these four tools is as follows:
As a conclusion of this assignment, it can be said that my intention towards pursuing a financial management education and degree would certainly makes me handy as far as achieving my goals are concerned. There is a positive tradeoff between cost of education and future return.
References
Peterson, P., Fabozzi, F., & Habegger, W. (2004). Financial management and analysis workbook. New York: Wiley.
Shapiro, A. (1992). Multinational financial management. Boston: Allyn and Bacon.
