Personal investment analysis for a service company

Assignment Help Accounting Basics

Reference no: EM131128502

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%.

1. Determine the net present value of cash flows from an undergraduate degree. Use the present value table provided in this chapter in Exhibit 5.

2. Determine the net present value of cash flows from a Masters of Accountancy degree, assuming 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: EM131128502

Questions Cloud

A common-size balance sheet created : Which inventory valuation method, FIFO or LIFO, will generally produce an ending inventory value on the balance sheet that is closest to current cost?

What happens to the coefficient on electric : To the equation in part (v), add an interaction between electric and educ . Is its co- efficient statistically significant? What happens to the coefficient on electric ?

What is the initial rate relative to vmax : For a Michaelis-Menten enzyme, if the concentration of substrate is 4 times the value of Km, - what is the initial rate relative to Vmax?

How far is mars from earth : How far is Mars from Earth when it is undergoing retrograde motion? What is the "phase" of Mars when it is undergoing retrograde motion

Personal investment analysis for a service company : 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.

Employer fire someone for not providing right documentation : What can happen if no undocumented workers are found but there are paperwork errors? At what point can an employer fire someone for not providing the right documentation?

Contribution needed to get caruso to that next category : Caruso Company's SUTA rate for next year is 2.9% because its reserve ratio falls in its state's 8% to less than 10% category [(contributions - benefits paid) ÷ average payroll = $93,500 ÷ $971,500 = 9.62%].

Promoted and received a substantial raise : 1. LO.1 Kelly recently was promoted and received a substantial raise. She talks to her tax adviser about the potential tax ramifications. After making some projections, her adviser "welcomes her to the AMT club."

What are the characteristics of the planets : In general, what are the characteristics of the planets that have been found so far around other stars

User Account

All Pages