CLO #3 – Evaluate short-term versus long-term investment decisions, increasing

CLO #3 – Evaluate short-term versus long-term investment decisions, increasing shareholder values.

CLO #4 – Evaluate short-term versus long-term investment decisions, increasing shareholder values.

Review the Mini Case: The MBA Decision in your textbook on page 132. Then, answer the following questions: 

  • How does Ben’s age affect his decision to get an MBA?
  • What other, perhaps non-quantifiable, factors affect Ben’s decision to get an MBA?
  • Assuming all salaries are paid at the end of each year, what is the best option for Ben—from a strictly financial standpoint?
  • Ben believes that the appropriate analysis is to calculate the future value of each option. How would you evaluate this statement?
  • What initial salary would Ben need to receive to make him indifferent between attending Wilton University and staying in his current position?
  • Suppose, instead of being able to pay cash for his MBA, Ben must borrow the money. The current borrowing rate is 4.3 percent. How would this affect his decision?
 

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