Calculate The Cost of an MBA Degree

Calculate The Cost of an MBA Degree

The first step is to calculate the cost of your MBA. If your employer sponsors your education’s cost, you can use what you would have paid or use opportunity costs as a basis.

My employer has established an education program that will cover the cost of my extended education as long as the degree is related to a form of business we engage in. Certain grade requirements are met for each course. That said, UAGC is charging my employer $2,220 per course. To complete the MBA, I must complete 12 classes, totaling $26,640. To date, I have completed 7 classes which come to a total of $15,540. The MBA program that UAGC provides allows individuals to not only extend their education but also remain in the workforce and gain additional work experience along with the extended education that will be received upon completion (Dumont, 2021).

After determining your initial investment, determine that investment’s net present value (NPV). For example, “Joe” will change jobs when he achieves his MBA and make 10% more annually. Joe plans to work for 20 more years. His MBA cost was $50,000. Do you forecast that pursuing an MBA is worth the financial investment? Be sure to show all your calculations.

Net present value calculates the value of future cash flows, including the initial investment and the potential profit or income generated from the investment (Jagerson, 2022). The present value will be calculated by PV= FV (1/1+r)n (Block, Hirt, Danielsen, 2019).

For this example, we will assume Joe is currently making $50,000 per year. This will result in the following:

$50,000 (1/1+.1)20

= $50,000 *1.10= $55,000

$55,000 *20= $1,100,000

Without the MBA and 10% increase, we assume Joe would continue earning $50,000 over the 20 years.

$50,000*20= $1,000,000

Therefore, the cost of obtaining the MBA would ultimately be worth the financial investment.

References

Block, S. B., Hirt, G. A., & Danielsen, B. R. (2019). Foundations of financial management (17th ed.). McGraw-Hill Higher Education.

Dumont, M., (June 27, 2021). The Real Cost of an MBA. Investopedia. https://www.investopedia.com/articles/professionaleducation/09/mba-real-costs.asp

Jagerson, J., (2022, July 25). What Is the Formula for Calculating Net Present Value (NPV)? Investopedia. https://www.investopedia.com/ask/answers/032615/what-formula-calculating-net-present-value-npv.asp

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Before beginning work on this discussion forum, read Chapter 9: The Time Value of Money in the Foundations of Financial Management textbook.

Calculate The Cost of an MBA Degree

In this discussion forum, you will determine the rate of return of your MBA degree.

Initial Response:

For this discussion forum,

• The first step is to calculate the cost of your MBA. If your employer sponsors your education’s cost, you can use what you would have paid or use opportunity costs as a basis.
• After determining your initial investment, determine that investment’s net present value (NPV). For example, “Joe” will be changing jobs when he achieves his MBA and will make 10% more annually. Joe plans to work for 20 more years. His MBA cost was $50,000. Do you forecast that pursuing an MBA is worth the financial investment? Be sure to show all your calculations.

Your initial response should be a minimum of 200 words. Graduate school students need to learn how to assess the perspectives of several scholars. Support your response with at least one credible scholarly resource besides the text.