Determine the net present value of cash flows

Assignment Help Accounting Basics
Reference no: EM132772354

Problem - A Masters 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. Assume that the average student with a graduate Masters of Accountancy degree is expected to earn an annual salary of $66,000 per year (assumed to be paid at the end of the year) for nine years after graduation. Assume a minimum rate of return of 10%.

Required -

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

2. Determine the net present value of cash flows from a Masters of Accountancy degree, assuming that no salary is earned during the graduate year of schooling.

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

Reference no: EM132772354

Questions Cloud

Determine the net present value of the film : The movie is expected to earn MGM $20 million. Determine the net present value of the film as of the beginning of 20Y5 if the desired rate of return is 20%
Advances in the internet and computing technologies : Current laws that govern cyberspace are inadequate to handle advances in the Internet and computing technologies.
Find how much is capital balance of a after admission of c : 20% interest in the partnership by investing 120,000 to the business. No bonus is given to C how much is the capital balance of A after the admission of C?
High capacity enterprise solution processing : Describe the key architecture points in a high capacity enterprise solution processing over 100/000 TPS?
Determine the net present value of cash flows : Determine the net present value of cash flows from a Masters of Accountancy degree, assuming that no salary is earned during the graduate year of schooling
How much is the gain and loss recorded in partnership books : C Purchases 20% interest in the partnership proportionately from A and B for 120,000. how much is the gain and loss recorded in the partnership books?
Recruit software engineer and a data engineer : He wants to invest in a scalable system and he is thinking to recruit a software engineer and a data engineer (you).
Does your analysis support the student purchasing computer : Use the present value tables provided in Appendix A in performing your analysis. Does your analysis support the student purchasing the computer
How much is the capital balance of a after admission of c : C purchases 20% interest in the partnership from A for P 120,000. How much is the capital balance of A after the admission of C?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd