Finance question

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Mr A has just graduated from the univesity with BBA and must decide whether to start working now or to get a MBA degree .In either case , he wants to get retired 20 years from now.A MBA requires expenditure of Rs. 60000 per year for each of next 2 years and he will start working immediately after getting a MBA degree.Discount rate for cash flows is 7%pa.Cash inflows occuring at the end of year and cash outflow occuring at the beginning of the year .If he goes work for now , he can expect a salary of Rs 50000 per year for each of next 20 years.If he gets a MBA degree ,his salary will be Rs 100000 per year .What is Net present value of his decision if he decides to do a MBA ?

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CA. Sandeep Kumawat

341 Points Joined September 2007

Cashflow	1.07
Yeat	PVF	CF	PV	CF	PV
0	1	(60,000)	(60,000)	-	-
1	0.934579	(60,000)	(56,075)	50,000	46,729
2	0.873439	-	-	50,000	43,672
3	0.816298	100,000	81,630	50,000	40,815
4	0.762895	100,000	76,290	50,000	38,145
5	0.712986	100,000	71,299	50,000	35,649
6	0.666342	100,000	66,634	50,000	33,317
7	0.62275	100,000	62,275	50,000	31,137
8	0.582009	100,000	58,201	50,000	29,100
9	0.543934	100,000	54,393	50,000	27,197
10	0.508349	100,000	50,835	50,000	25,417
11	0.475093	100,000	47,509	50,000	23,755
12	0.444012	100,000	44,401	50,000	22,201
13	0.414964	100,000	41,496	50,000	20,748
14	0.387817	100,000	38,782	50,000	19,391
15	0.362446	100,000	36,245	50,000	18,122
16	0.338735	100,000	33,873	50,000	16,937
17	0.316574	100,000	31,657	50,000	15,829
18	0.295864	100,000	29,586	50,000	14,793
19	0.276508	100,000	27,651	50,000	13,825
	NPV		736,683		516,780