1. Becky works in sales but is considering quitting work for two years to earn an MBA. Her current job pays $40,000 (after taxes) but she could earn $55,000 per year (after taxes) if she had a master's degree in business administration. Tuition is $10,000 per year. Becky's discount rate is 6% per year. She just turned 48 and plans to retire when she turns 55 (meaning she will benefit from the degree from age 50 to 55) whether or not she gets her MBA. Based on this information, should she go to school to get her MBA?
Calculate the PV of the costs of her education and the PV of her benefits from the MBA. DO NOT CALCULATE THE PV OF HER SALARY WITH AND WITHOUT THE MBA AS TWO SEPARATE CALCULATIONS.