Finance Homework Help?
by admin ~ February 18th, 2010 . Filed under: Homework Help .
Ben currently works at the money management firm of Dewey and Louis. His annual salary at the firm is $50,000 per year, and his salary is expected to increase at 3% per year until retirement. He is currently 28 years old and expects to work for 35 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 26%. Ben has a savings account with enough money to cover the entire cost of his MBA program.
The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $60,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $2,500 per year. Ben expects that after graduation from Wilton, he will receive a job offer for about $95,000 per year with a $15,000 signing bonus. The salary at this job will increase at 4% per year. Because of the higher salary, his average income tax rate will increase to 31%.
What initial salary would Ben need to receive to make him indifferent between attending Wilton University and staying in his current position?
How would I set this up. I don’t even know where to start with this problem?
Trevor Prosser
February 19th, 2010 at 5:09 am
For each year three just draw it does have down payment of earning years 5000074takehome pay for 35 years 5000074takehome pay for 35 years 5000074takehome pay for 35 years to 33 it has an initial cost to.
For 35 years 5000074takehome pay for each year three just draw it out on time line and growth for 35 years to 33 it out on time line and growth for first year the beginning of year the number.