If the salary is paid at the end of the year, how much will Johnget?
1. He can keep his current job at the management firm D&L.His annual salary at the firm is $65,000 per year and is salary isexpected to increase at 3% per year until retirement. He iscurrently 28 years old and he expects to work for 40 more years.His current job includes a full paid health insurance plan and iscurrent average tax rate is 26%. John has a savings account withenough money to cover the entire cost of the MBA program.
2. The Carlton College offers a one-year MBA program. Thetuition cost is $85,000 to be paid upon matriculation. Books andother supplies for the program are expected to cost $4,500. TheCarlton program is a full-time one that does not allow students towork in the meantime. John thinks that after the Carlton degree hewill be able to receive an offer of $92,000 per year with a $18,000signing bonus. The salary at this job will increase at 3.5% peryear. His average tax rate at this level of income will be 29%.
