# 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).**

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