# Practicing Net Present Value

**Question description**

A Master’s of Accountancy degree at Central University costs $12,000 for an additional fifth year of education beyond the bachelor’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 $50,000 per year (assumed to be paid at the end of the year) for 10 years after graduation. Assume that the average student with a graduate Master’s of Accountancy degree is expected to earn an annual salary of $66,00 per year (assumed paid at the end of the year) for nine (9) years after graduation. Assume a minimum required rate of return of 10%:

**1. Determine the
net present value of cash flows from an undergraduate degree.**

**2. Determine the
net present value of cash flows from a Master’s of Accountancy degree, assuming
no salary is to be earned during the graduate year of schooling.**

**3. What is the
net advantage or disadvantage of pursuing a graduate degree under these
circumstances?**

**The paper should
meet the following requirements:**

**•Be 2-4 pages in
length, not counting the required title and reference pages. The paper should
include an introduction, a body with at least two fully developed paragraphs,
and a conclusion.**

**•Support your
interpretation with evidence from the textbook and at least two peer-reviewed
journal articles.**

**•Citations should
adhere to the APA requirements.**

**Textbook (Managerial
Accounting 13 edition, Warren, Reeve, Duchac).**

## Tutor Answer

## Review from our student for this Answer

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors