Question 1
The age of Ben greatly affects his decision regarding an MBA. Ben graduated six years back at the age of 22. Now assuming that he starts MBA at the age of 28, it can be stated that he has saved enough money to pay for his two years study. At the age of 30 after completion of MBA, he will still have many years to earn with better possibilities and increased salary. Moreover, the learning capacity declines with age. It is another factor in making a decision for studying MBA (Brigham and Ehrhardt, 2013).
Question 2
There are several non-quantifiable factors that may affect the decision of Ben. The most important one is his eagerness and readiness to learn and study. After a break of 5 years, it is not easy to be good at study again. It takes a lot of nerves. Secondly, he will have to bear the extra costs in the form of tuition and lodging expenses with a paid insurance that is currently offered by his employer. The decision to pursuing MBA degree will affect the personal and social life of Ben as well. His relationship with his assumed partner or wife if any may get affected. Thirdly, there is a positive side as well. MBA degree requires a prerequisite of two years professional experience that Ben already has (Anderson et al, 2015).
Question 3
Based on the above financial analysis it is wise to start MBA at Wilton College as the PV of the future salary and signing bonus combined with the rate of growth will is more as compared to the other options. The expenses are higher as well, but Ben has enough savings to cover these costs. Therefore, the prudent decision from the financial viewpoint is to start MBA at Wilton.
Question 4
Ben’s conjecture about calculating the future values of all the alternatives to get a anticipated fair position is true. In my view, it is wise to calculate the future value of a present cash flow to get a fair position and analysis about the current expenses in the future. It helps in analyzing what effect the current expenses will today bring on the future outcomes (Anderson et al, 2015).
Question 5
Question 6
If Ben has to borrow money to pursue his MBA, the cost of financing will put a financial burden. The PV of the borrowed money for MBA at Wilton and Mount Perry College will be $169,215 and $104,135.20 respectively. The effect of these interest payments will not be considerable enough on the decision of Ben. He can still continue studies at Wilton College as the PV of the salary along with signing bonus will be much higher than the PV of the borrowing costs (Patnaik, 2009).
References
Anderson, D., Sweeney, D., Williams, T., Camm, J., & Cochran, J. (2015).An introduction to management science: quantitative approaches to decision making. Cengage Learning.
Bojadziev, G., & Bojadziev, M. (2007). Fuzzy logic for business, finance, and management. World Scientific Publishing Co., Inc..
Brigham, E., & Ehrhardt, M. (2013). Financial management: theory & practice. Cengage Learning.
Patnaik, P. (2009). The value of money. Columbia University Press.
Wong, J. D. (2008). Time Value of Money. In Encyclopedia of Public Administration and Public Policy, Second Edition (pp. 1923-1930).
