90.2K

Verified Solution

Link Copied!

Find of the cost of a bachelor's degree at the university of your choice assume additional costs of $16,000 for an additional fifth year of education to get Master's degree. Assume that all tuition is paid at the beginning of the year. A student considering this investment must evaluate the present value of cash flows from possessing a graduate degree versus holding only the undergraduate degree. Assume that the average student with an undergraduate degree is expected to earn an annual salary of $55,000 per year (assumed to be paid at the end of the year) for 10 years. Assume that the average student with a graduate Masters degree is expected to earn an annual salary of $76,000 per year (assumed to be paid at the end of the year) for nine years after graduation. Assume a minimum rate of return of 10%. Determine the net present value of cash flows from an undergraduate degree. Use the present value table provided in this chapter 26. Determine the net present value of cash flows from a Masters degree, assuming that no salary is earned during the graduate year of schooling. What is the net advantage or disadvantage of pursuing a graduate degree under these assumption?

ASU Online $13,698 4 years

Table A-2 Present Value of Ordinary Annuity of $1 Present Value Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% 1 2 3 4 5 0.990 1.970 2.941 3.902 4.853 0.980 1.942 2.884 3.808 4.713 0.971 1.913 2.829 3.717 4.580 0.962 1.886 2.775 3.630 4.452 0.952 1.859 2.723 3.546 4.329 0.943 1.833 2.673 3.465 4.212 0.935 1.808 2.624 3.387 4.100 0.926 1.783 2.577 3.312 3.993 0.917 1.759 2.531 0.909 1.736 2.487 3.170 3.791 0.893 1.690 2.402 0.877 1.647 2.322 2.914 3.433 0.870 1.626 2.283 2.855 3.352 0.862 1.605 2.246 2.798 3.274 0.847 1.566 2.174 2.690 3.127 0.833 1.528 2.106 3.240 3,037 2.589 3.890 3.605 2.991 5.242 6.002 4.111 4.564 6 7 8 9 10 5.795 6.728 7.652 8.566 9.471 5.601 6.472 7.325 8.162 8.983 5.417 6.230 7.020 7.786 8.530 6.733 5.076 5.786 6.463 7.108 7.722 4.917 5.582 6.210 6.802 7.360 4.767 5.389 5.971 6.515 7.024 4.623 5.206 5.747 6.247 6.710 4.486 5.033 5.535 5.995 6.418 4.355 4.868 5.335 5.759 6.145 4.968 3.889 4.288 4.639 4.946 5.216 3.784 4.160 4.487 4.772 5.019 3.685 4.039 4.344 4.607 4.833 3.498 3.812 4.078 4.303 4,494 3.326 3.605 3.837 4.031 4.192 7.435 8.111 5.328 5.650 5.453 5.660 11 12 13 14 15 10.368 11.255 12.134 13.004 13.865 9.787 10.575 11.348 12.106 12.849 9.253 9.954 10.635 11.296 11.938 8.760 9.385 9.986 10.563 11.118 8.306 8.863 9.394 9.899 10.380 7.887 8.384 8.853 9.295 9.712 7.499 7.943 8.358 8.745 9.108 7.139 7.536 7.904 8.244 8.559 6.805 7.161 7.487 7.786 8.061 6.495 6.814 7.103 7.367 7.606 5.938 6.194 6.424 6.628 6.811 5.842 6.002 6.142 5.234 5.421 5.583 5.724 5.847 5.029 5.197 5.342 5.468 5.575 4.656 4.793 4.910 5.008 5.092 4.327 4.439 4.533 4.611 4.675 16 17 18 19 20 14.718 15.562 16.398 17.226 18.046 13.578 14.292 14.992 15.678 16.351 12.561 13.166 13.754 14.324 14.877 11.652 12.166 12.659 13.134 13.590 10.838 11.274 11.690 12.085 12.462 10.106 10.477 10.828 11.158 11.470 9.447 9.763 10.059 10.336 10.594 8.851 9.122 9.372 9.604 9.818 8.313 8.544 8.756 8.950 9.129 7.824 8.022 8.201 8.365 8.514 6.974 7.120 7.250 7.366 7.469 6.265 6.373 6.467 6.550 6.623 5.954 6.047 6.128 6.198 6.259 5.669 5.749 5.818 5.877 5.929 5.162 5.222 5.273 5.316 5.353 4.730 4.775 4.812 4.844 4.870 21 22 23 24 25 17.011 17.658 18.292 18.914 19.523 15.415 15.937 16.444 16.936 17.413 14.029 14.451 14.857 15.247 15.622 12.821 13.163 13.489 13.799 14.094 11.764 12.042 12.303 12.550 12.783 10.836 11.061 11.272 11.469 11.654 10.017 10.201 10.371 10.529 10.675 9.292 9.442 9.580 9.707 9.823 8.649 8.772 8.883 8.985 9.077 7.562 7.645 7.718 7.784 7.843 6.687 6.743 6.792 6.835 6.873 6.312 6.359 6.399 6.434 6.464 5.973 6.011 6.044 6.073 6.097 5.384 5.410 5.432 5.451 5.467 4.891 4.909 4.925 4.937 4.948 18.857 19.660 20.456 21.243 22.023 22.795 23.560 24.316 25.066 25.808 6.118 6.136 26 27 28 29 30 20.121 20.707 21.281 21.844 22.396 17.877 18.327 18.764 19.188 19.600 15.983 16.330 16.663 16.984 17.292 14.375 14.643 14.898 15.141 15.372 13.003 13.211 13.406 13.591 13.765 11.826 11.987 12.137 12.278 12.409 10.810 10.935 11.051 11.158 11.258 9.929 10.027 10.116 10.198 10.274 9.161 9.237 9.307 9.370 9.427 7.896 7.943 7.984 8.022 8.055 6.906 6.935 6.961 6.983 7.003 6.491 6.514 6.534 6.551 6.566 6.152 6.166 6.177 5.480 5.492 5.502 5.510 5.517 4.956 4.964 4.970 4.975 4.979 40 27.355 23.115 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.244 7.105 6.642 6.234 5.548 4.997 32.835 39.196 50 31.424 25.730 21.482 18.256 15.762 13.801 12.233 10.962 9.915 8.304 7.133 6.661 6.246 5.554 4.999

Answer & Explanation Solved by verified expert

See Answer