The MBA Decision
When you Graduate from an MBA class
Mini-Case Study: The MBA Decision 2
Introduction
Graduating from an MBA class is mostly related to success and good living associated with high
paying jobs. But making the final to quit from a secure job and taking the chances to move up the
ladder maybe one of the hardest decisions that most potential students experience. These paper
looks at the process of determining the best decision to take considering all the quantifiable and
the non quantifiable factors.
Financial Factors that Ben Bates must consider
- The age of Ben is relevant when estimating the number of years that he can work. For example
if his age is currently 30yrs, and if he is expected to retire after reaching the age of 55yrs then his
remaining working life would be 25yrs. - The other non-quantifiable are the increased taxation that is progressive, the bonus that’s
payable once and the other medical health benefits that are offered while studying for post
graduating degrees. - Benefits from the current job in 40yrs with an interest rate of 3% with a salary of $65,000 will
amount to $ 1,145,175.148. After graduating from the MBA Class, Ben is hoping to get a job
with a salary of 110,000 p.a. with a growth rate of 4% for 38 yrs, 2 years spent in college to earn
the MBA. (See Appendix A) - The Future value for the current job offer of $65,000 at an annual growth of 3% for forty years
amounts to $212,032.5. The job offer after MBA will generate a Future value of $488,269.5 at a
growth rate of 4% in 38 years. (See Appendix B)
The future values are not for periods over 30 yrs and the interest rates are lower than 10% it
Mini-Case Study: The MBA Decision 3
would be better to calculate the options using the annuities due.
- The Present value of the benefits that Ben may receive from the current employment, using the
annuity due Calculations amount to a net of 847,429.61 after a deduction of 30% interests. The
compensation that Ben will earn after graduating with an MBA will amount to $4,556,446.59
after deducting the taxes and the tuition and college expenses. (See Appendix C)
The total benefits to be derived from the job offers are much more than the current benefits from
the current job. The MBA offer has a net benefit of $4,536,446.59 on getting a job after
completion. While the current job offers a total of 867,429.60. (Ross, Westerfield & Jaffe, 2013,
p.175).
Ben would need a salary of; $4,556,446.59 – 847829.61 = 3,708,617
The present value of 3,708,617 at 3% interest for 40 years = 1,136,902 per year which is
equivalent to $94,741.83 per month. (See Appendix D) - The benefits that Ben will enjoy in 40 years amount to $847, 429.61 if he continues with his
current job while if he trains and earns his MBA, he will earn a net of $4,545,771.59 after paying
his taxes and college expenses. (See Appendix E)
Discussion
The present value of the total benefits that Ben bates can possibly earn from his employment in
the next forty years is $1,145,175.148 at a growth of 3%. The other benefits that he can derive
from his employment are the low taxes that are chargeable because of low salaries. The amounts
receivable after graduating from the MBA class are very high compared to the benefits that Ben
Bates receives from his current employment even after factoring all the expenses incurred while
Mini-Case Study: The MBA Decision 4
seeking the MBA degree course. I certainly would recommend to him to take the MBA class.
Conclusion
The option to take an MBA degree course is a good decision compared to the current job
undertaking. It would be profitable for Ben Bates to quit the current job and enrolled at the Ritter
College of Business Studies at Wilton University. The cost of the tuition, books and also the loan
interests are still affordable given the outcome of the MBA degree course.
Mini-Case Study: The MBA Decision 5
Reference
Ross, S. R., Westerfield, R. W. & Jaffe, J. (2013) Corporate finance (10 th Ed.) New York, NY:
McGraw-Hill. pp. 175
