Calculating the NPV of a master's degree (Please do it for an MBA)

Instructions for Group Project:  Computing the NPV of a Two-Year Masters Degree

1. The topic of this team research assignment is to estimate the return on a two-year masters degree.  You may choose any type of master’s degree.
2. Work with your assigned study group and use the Excel spreadsheet in the assignment module as template for computing the NPV.  In other words, I’ve given you this Excel spreadsheet that has the cells programmed.  You can use that if you want, or venture into something else.   Just because my template only has 10 years doesn’t mean you should assume that the hypothetical individual will only work 10 years after his or her master’s degree.  Who retires when they are 35 years old?!  Extend the spreadsheet to assume a reasonable retirement age. 
3. The assumptions on earnings (how much do you earn with a bachelors degree compared to a masters degree), earnings growth (how much do earnings grow over the worker’s entire career; related, how long does the career last), costs of a masters degree (tuition, fees, books, etc.), and discount rates (see the lecture notes) must be grounded in empirical facts to the extent possible.  Be sure to cite your sources for the assumptions.  You must do your own research here about the assumptions. Please write a paragraph or two about your assumptions and why you made them and where you found them.
4. The main result of your analysis is to compute a NPV for the proposed investment in education.  Please discuss what your result means in relationship to the decision to pursue a masters degree.   
5. Please also comment on what considerations outside the NPV analysis may affect the decision to pursue a masters degree.
6. Please don’t hesitate to ask me any questions.  

 I have included the Excel Spreadsheet 

Deliverable: 

1. An Excel spreadsheet with the NPV calculations and graphical representations of experience-earnings or age-earnings profiles.
2. A narrative that explains your assumptions and discusses the implications for whether it is feasible to pursue a masters degree, including issues outside the numerical analysis that may affect your decision.  So, I’d like to see a 2-3 page report with an excel spreadsheet attached. I’ll take point off if all your names aren’t on the cover sheet.