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
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.
interpretation with evidence from the textbook and at least two peer-reviewed
adhere to the APA requirements.
Accounting 13 edition, Warren, Reeve, Duchac).