Cost of certification program: $5,000

Initial base pay differential: $10,000

growth rate of salary differential 3%
discount rate: 5.00%
This is when tuition is

Timeline:
Natasha's age: 30
years after initial investment: 0
Cash flow: ($5,000)

PV of salary differential: $228,556.53

NPV of undertaking the certification program: $223,556.53

10000
50
0.479968714892513
239984.357446256
228556.530901196
This is when tuition is due

31 32 33 34 35 36 37 38
1 2 3 4 5 6 7 8
0 $10,000 $10,300 $10,609 $10,927 $11,255 $11,593 $11,941

This would be when she

completes the certificate, but
the increase in salary does not
get paid until next year (year 2)
 39 40 41 42 43 44 45 46
9 10 11 12 13 14 15 16
$12,299 $12,668 $13,048 $13,439 $13,842 $14,258 $14,685 $15,126
 47 48 49 50 51 52 53 54
17 18 19 20 21 22 23 24
$15,580 $16,047 $16,528 $17,024 $17,535 $18,061 $18,603 $19,161
 55 56 57 58 59 60 61 62
25 26 27 28 29 30 31 32
$19,736 $20,328 $20,938 $21,566 $22,213 $22,879 $23,566 $24,273
 63 64 65
33 34 35
$25,001 $25,751 $26,523
Annual cost of MBA program: $25,000
Length of MBA program 3
Initial base pay differential: $20,000
growth rate of salary differential 3%
discount rate: 5.00% Tuition is due at the
next 3 years, starting

Timeline:
Natasha's age: 30
years after initial investment: 0
MBA program tuition cash flows: ($25,000)
Salary differential cash flows: $0

PV of salary differential: $397,000.11

PV of MBA program tuition: ($71,485.26)
NPV of undertaking the MBA program: $325,514.85

20000
50
0.459577253434815
459577.253434815
397000.110946822

25000
20
0.0929705215419502
46485.2607709751
71485.2607709751
years

Tuition is due at the beginning of the

next 3 years, starting today

31 32 33 34 35 36 37 38
1 2 3 4 5 6 7 8
($25,000) ($25,000)
$0 $0 $0 $20,000 $20,600 $21,218 $21,855 $22,510

She completes her

degree at the end of
year 3, but the salary
differential does not
start for one year.
 39 40 41 42 43 44 45 46
9 10 11 12 13 14 15 16

$23,185 $23,881 $24,597 $25,335 $26,095 $26,878 $27,685 $28,515

 47 48 49 50 51 52 53 54
17 18 19 20 21 22 23 24

$29,371 $30,252 $31,159 $32,094 $33,057 $34,049 $35,070 $36,122

 55 56 57 58 59 60 61 62
25 26 27 28 29 30 31 32

$37,206 $38,322 $39,472 $40,656 $41,876 $43,132 $44,426 $45,759

 63 64 65
33 34 35

$47,131 $48,545 $50,002