year. Raj also estimates that room and board expenses will cost $20,000 per year at both schools. The appropriate discount rate is 6.5 percent. Questions: How does Raj's age affect his decision to get an MBA? What other, perhaps nonquantifiable, factors affect Raj's decision to get an MBA? Assuming all salaries are paid at the end of each year, what is the best option for Raj from a strictly financial standpoint?
Raj believes that the appropriate analysis is to calculate the future value of each option. How would you evaluate this statement? What initial salary would Raj need to receive to make him indifferent between attending Assiniboine University and staying in his current position? Suppose, instead of being able to pay cash for his MBA, Raj must borrow the money. The current borrowing rate is 5.4 percent. How would this affect his decision? Question 2, Financing Tuxedo Air's Expansion Plans with a Bond Issue: Mark Taylor and Jack Rodwell, the owners of Tuxedo Air, have decided to expand their operations. They instructed their newly hired financial analyst, Ed Cowan, to enlist an underwriter to help sell $35 million in new 10-year bonds to finance construction. Chris has entered into discussions with Suzanne Lenglen,
- Fall '14
- Finance, Master of Business Administration, Tuxedo Air, Raj Danielson