Response to Classmates Discussions
kingstonman41
Week3Discussion1ClassmatesResponse.docxWeek 3 - Discussion Forum 1
Guided Response: Respond to at least three of your fellow students’ or instructor posts in a substantive manner and provide information or concepts that they may not have considered. Each response should have a minimum of 100 words and be respectful of others’ opinions and beliefs that differ from your own. You are encouraged to post your required replies earlier in the week to promote more meaningful and interactive discourse in this discussion forum. Continue to monitor the discussion forum until Day 7 and respond with robust dialogue to anyone who replies to your initial post.
On this Document there three classmates that needs to be respond to they are Jamie Choate , Britney Graves , and Joseph Choice
. Please provide reference to your response if any
Jamie Choate
TuesdayJul 14 at 7:37am
Pursuing an MBA can be very beneficial to individuals looking to broaden their career opportunities, further progression within a company through promotions, or receive increased compensation (Hayes, 2020). However, graduate degrees can be very costly as well and the price continues to rise. One must then weigh the costs against the benefits to determine the return on investment that they will receive. One way to calculate the return on investment is to determine the cost of the investment and the net present value based on the benefits you feel you will gain from that investment. Basically we will look at the future value of the investment given an expected rate of growth over a period of time ().
For this exercise, we will use the full estimated cost of tuition of $25,350. This is spread over a three year period since I enrolled in the program of October of 2019 and expect to complete in February of 2021. We will assume that by receiving the degree I will receive a promotion within the next year with an expected salary increase of 10%. After the initial 10% increase, that figure will increase by 3% annually due to cost of living increases. Based on the calculations, as shown in the figure below, the NPV is $194,738. The investment has an internal rate of return of 27% after 3 years and 46% after 10 years. Based on these calculations, it is beneficial and worth the investment to pursue my MBA. If I were to take the cost of tuition and invest it in something else that earned a 5% annual rate of return, in 10 years, the same amount would equate to $43,357 which is still less than the ROI received from the educational investment.
For me, the degree is completely funded by my company. I do not expect to get a promotion directly after I receive my degree but do look for it to be beneficial in furthering my career in the future.
References:
Block, S. B., Hirt, G. A., & Danielsen, B. R. (2019). Foundations of financial management (17th ed.). Retrieved from https://www.vitalsource.com
ExcelJet. (2020). Excel IRR Function. Retrieved from https://exceljet.net/excel-functions/excel-irr-function
Hayes, A. (2020, June 23). When Is an MBA Worth It? Retrieved from https://www.investopedia.com/articles/personal-finance/011415/when-mba-worth-it.asp (Links to an external site.)
Britney Graves
WednesdayJul 15 at 1:58pm
(Haynes, 2020) explains that "Earning a Master's in Business Administration (MBA) can help professionals enhance their career opportunities, receive increased compensation, and job promotions. An MBA can provide the skills and knowledge necessary to start a new business, and many employers require an MBA for certain management or leadership positions" (p. 1). While an MBA can be useful in creating new opportunities, increasing wages, and giving a competitive advantage to applicants, it comes at a cost to students. While I was fortunate enough to have my MBA paid for by the military, many individuals must come out of pocket or obtain loans to pay for their degrees. After reviewing my history at Ashford University, I needed roughly 18 classes; each class is three credits and cost $740 per; credit a technology-free of $145 per course is also charged. Therefore $740 x 3 = $2,220 + 145 = $2,365 for 18 classes, $2,365 x 18 = $42, 570. This could be significantly higher or lower, depending on the student, location, and school that is attended. Is investing your time and money into an MBA worth it in the long run? Calculating the return on investment (ROI) can be done in many ways; however, I will focus on net present value (NPV). "The reason that NPV is often chosen as the model for financial analysts is because it evaluates the time value of money and delivers a specific comparison between initial cash outlay versus the present rate of return" (Chang, 2020, p. 1). Figuring the NPV helps determine is an MBA, amongst other things, would be worth the investment. First, determine the current value for each year's return, then divide the expected cash flow by the discourse rate. The higher the NPV, the better the investment, and the opposite is true.
We know the cost of the MBA about $42,000 (year 1 $21,000, year 2 $21,000) Of course, I'm doing online courses, so my earning while studying was 55,000, but after subtracting $21,000 for the first two years, my earning are about $34,000 for both years. After I graduate, I expect a 7 percent increase in earnings for the first year after graduation and a 4 percent salary increase for 30 years. Below is an excel spreadsheet of my findings.
While this was an estimate with fabricated numbers, I believe these calculations hold weight as to what my future will look like after graduation. I think earning an MBA is something employers not only look for but have a positive impact on your overall salary. After creating and reviewing my document, obtaining my MBA is undoubtedly worth the investment.
Reference
Chang, E. (2020, March 20). What Is Net Present Value and How Do You Calculate It? Retrieved July 15, 2020, from https://www.thestreet.com/investing/what-is-net-present-value-14797267
Hayes, A. (2020, June 23). When Is an MBA Worth It? Retrieved July 15, 2020, from https://www.investopedia.com/articles/personal-finance/011415/when-mba-worth-it.asp
Joseph Choice
ThursdayJul 16 at 11:02am
Obtaining an MBA was always one of my long-term goals after I first earned a position as a Supervisor in my company. Kowarski (2019) mentions that “MBA credentials are highly relevant to individuals who want to gain the interdisciplinary strategic thinking and communication skills necessary to lead a complex organization.” (para 13) Throughout the years, I was able to learn many of the skills that an MBA offers; however, having the actual degree is an investment that would help open the doors to new opportunities in such a competitive landscape. I am fortunate that my employer subsidizes the cost of obtaining this degree, which has been an enormous relief and motivation to continue to complete this program. After conducting this exercise of calculating the NPV of the investment in an MBA program, it was clear to me that the investment yielded extremely positive results. My figures were based on estimations that I would receive a 10% salary increase upon completing my MBA and each year after receiving a 3% increase on my $80,000. I placed my intervals to 10 years and immediately saw that the tuition costs in an MBA provided a positive net present value and a tremendous internal rate of return. If I had to pay out of pocket and the decision was between purchasing a brand-new sports car or investing in my future with an MBA degree, the choice is clear that the return on an MBA is worthwhile. Although my salary calculations were conservative for this exercise, I honestly do hope to be able to accelerate my career in higher-paying positions to be ready to retire at a younger age.
References:
Kowarski, I. (2019). Is an MBA worth it? How to Decide. USNEWS. https://www.usnews.com/education/best-graduate-schools/top-business-schools/articles/2019-05-17/is-an-mba-worth-it-how-to-decide
