Review “Mini Case: The MBA Decision” in your textbook on page 200, or at the end of Chapter 6 in your textbook. Then, answer the following questions:

  • How does Ben’s age affect his decision to get an MBA?
  • What other, perhaps non-quantifiable, factors affect Ben’s decision to get an MBA?
  • Assuming all salaries are paid at the end of each year, what is the best option for Ben—from a strictly financial standpoint?
  • Ben believes that the appropriate analysis is to calculate the future value of each option. How would you evaluate this statement?
  • What initial salary would Ben need to receive to make him indifferent between attending Wilton University and staying in his current position?
  • Suppose, instead of being able to pay cash for his MBA, Ben must borrow the money. The current borrowing rate is 5.4%. How would this affect his decision?