Calculating the Net Present Value of My Mba Degree

Calculating the Net Present Value of my MBA degree

The net present value of my MBA degree is $2,047,244 with a rate of return of 68.09%. Though this seems like a very high number and rate of return, there are certain factors and figures that were taken into consideration when coming to this conclusion. Said evidence will be discussed further in this paper.

Using the Present Value of Education worksheet, we are entering values in order to calculate the NPV. The Base Year and Current Age is self explanatory. I am planning on being done with my MBA program in 2 years, and through PLU's tuition program, my tuition rate will not increase over those two years. Currently, the total price of tuition for the MBA program is $39,510. Thus I entered "2" in the Years in College box and "$19,755" in the Education Cost Base Year. I entered "6.8%" for Education Cost Escalation based on what I read in The Mast this week stating that PLU will be raising their tuition price by that amount.

Moving on to Salary, the average PLU MBA graduate starts out at $110,000. I particularly like that number, so that is what I am going for in this scenario. I currently make $47,500. Those are the figures for Higher Education Base Year and Original Education Base Year Salaries respectively. At my current job, I am guaranteed a 4% raise every year at the minimum, so I placed that in for my Income Growth Original Education. Income Growth Higher Education was a little tougher. I decided to go higher than Original Education because of the status of the position, but not too high as to make it unreasonable. I felt that 5% would be a good growth rate for that Higher Education income growth.

I am working full time, while attending PLU for my MBA, so 100% of my Original Education salary applies in this scenario. Because I like what I do and I enjoy the field that I am in, I plan on working until the age of 65 before I retire, even if the possibility of retirement appears more quick than that.

When it comes to figuring out the NPV of