Calculate the npv for each educational option

Assignment Help Basic Computer Science

Reference no: EM132891770 , Length: 2

Assume a student is planning to pursue a two-year master's degree. There are two educational options the student is considering, with investment and cash flows as follows.

Option A: Full-Time Education Example cash investment: $100,000. Currently the student is earning $30,000. The student will quit his/her current job to study a Master's degree in computer science. Upon graduation the student hopes to earn $60,000 per year in new job.

Option B: Part-Time Education Example cash investment: $100,000. Currently the student is earning $30,000. The student can work part-time for three years at a salary of $20,000 while studying towards the master's degree in project management. Upon graduation the student anticipates a possible increase in salary by $10,000 (total $40,000) in the same company.

The requirements for the assignment are:

Question 1. Briefly describe what net present value is, how it is calculated, and what it is used for.

Question 2. Calculate the NPV for each educational option. The discount rate is 8%.

Question 3. Which option should the student choose? Explain your decision including any necessary assumptions made.

Reference no: EM132891770

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