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Business Finance

Description

Return on Investment – Education Funding

Develop a three- to five-page analysis (excluding the title and reference pages) on the projected return on investment for your college education and projected future employment. This analysis will consist of two parts.

Part 1: Describe how and why you made the decision to pursue an MBA. In the description, include calculations of expenses and opportunity costs related to that decision.

Part 2: Analyze your desired occupation. Determine how much compensation (return) you expect to earn and how long will it take to pay back the return on this investment. Use the financial formulas, Net Present Value (NPV), Internal Rate of Return (IRR), and Payback, provided in Chapters 3 and 4 of your text.

The analysis should be comprehensive and reference specific examples from a minimum of two scholarly sources, in addition to your text. The paper must be formatted according to APA.

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Explanation & Answer

Attached.

Running head: MBA INVESTMENT

1

Return on MBA Investment
Author’s Name
Institution Affiliation
Instructor
Date

MBA INVESTMENT

2
Return on MBA Investment
INTRODUCTION

The goal of this paper is to illustrate the various aspects required to pursue a degree in
MBA as an investment. The analysis for the job market, the education plan for the MBA
program as well as the financial implication such as the opportunity cost, the living cost, and the
education cost are the major aspects discussed. Finally, the return from the MBA degree
investment has been highlighted using various financial formulas.
Part 1
The advantage of the MBA degree in the United States and the entire globe motivates and
individuals to pursue the MBA degree either part time or full time. The flexibility of the program
also encourages employees to enroll. The following reasons support the decision to pursue the
Master’s degree in MBA.
The MBA degree increases the chances to earn a higher salary than individuals with an
ordinary master degree. Furthermore, the employees with regular masters earn less compared
with the one with MBA. The salary range is expected to be twice an ordinary degree salary.
According to various research, the average salary for the MBA graduate in the United States and
Europe countries is 84,650 and 100,000 euros per year respectively (Smith, D. E., & Mitry, D. J,
2008).
The employed and non-employed students access the diverse opportunities during the
program. The professors, the teaching staffs, and colleagues have the managerial experience that
can be imparted to the students. Furthermore, the MBA programs have internships which expose

MBA INVESTMENT

3

the students to the employment opportunities. Each program has the alumni network that
increases the opportunities for the students.
The Expenses and the Opportunity Cost
The two years’ salary plus the associated expenses such as tuition fee, books, and room
are the cost incurred to an MBA full-time students. Moreover, the unemployment period can be
prolonged to the students if they graduate during industry or economic downturn. An employer
who forgoes the job of $45,000 and pursues an MBA degree of $158,800 (total cost) per year
incurs an expense of $203,000 per year. It approximates to $406,000 after two years.
Additionally, the work experience for two years will be lost.
The total expenses= the job salary + the total cost
= $45,000 + $158,800
= $203,000
The average salary for the MBA in the United States is approximately $109,000 per year.
An individual needs to work for four years before starting earning the profit from the education
investment. Professionals ret...


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