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NatashaKingery Case
NatashaKingery Case
Ag
e
31
32
33
34
35
36
37
38
39
10
40
11
41
12
42
13
43
Current salary
$
70,000.00
$
71,400.00
$
72,828.00
$
74,284.56
$
75,770.25
$
77,285.66
$
78,831.37
$
80,408.00
$
82,016.16
$
83,656.48
$
85,329.61
$
87,036.20
$
88,776.93
Present Value of
Current Salary
$
67,822.89
$
67,027.75
$
66,241.94
$
65,465.34
$
64,697.85
$
63,939.35
$
63,189.75
$
62,448.93
$
61,716.80
$
60,993.25
$
60,278.19
$
59,571.51
$
58,873.11
14
44
15
45
16
46
17
47
18
48
19
49
20
50
21
51
22
52
23
53
24
54
25
55
26
56
27
57
28
58
29
59
30
60
31
32
61
62
$
90,552.46
$
92,363.51
$
94,210.78
$
96,095.00
$
98,016.90
$
99,977.24
$
101,976.78
$
104,016.32
$
106,096.64
$
108,218.58
$
110,382.95
$
112,590.61
$
114,842.42
$
117,139.27
$
119,482.05
$
121,871.69
$
124,309.13
$
126,795.31
$
$
58,182.90
$
57,500.79
$
56,826.66
$
56,160.45
$
55,502.04
$
54,851.35
$
54,208.29
$
53,572.77
$
52,944.70
$
52,324.00
$
51,710.57
$
51,104.33
$
50,505.20
$
49,913.09
$
49,327.93
$
48,749.63
$
48,178.10
$
47,613.28
$
33
63
34
64
35
65
129,331.22
$
131,917.84
$
134,556.20
$
137,247.32
Sum of present
Value
47,055.07
$
46,503.42
$
45,958.23
$
45,419.43
$
1,956,378.91
A
ge
Tier 2
salary
31
$
70,000.00
32
$
71,400.00
33
$
72,828.00
34
$
74,284.56
35
$
75,770.25
36
$
77,285.66
37
$
78,831.37
38
$
80,408.00
39
40
$
82,016.16
$
8
9
10
Tier 3
Bonus
$
10,000.0
0
$
10,100.0
0
$
10,201.0
0
$
10,303.0
1
$
10,406.0
4
$
10,510.1
0
$
10,615.2
0
$
10,721.3
5
$
Tier 3
Salary
$
70,000.00
Present
Value
$
67,822.89
$
81,400.00
$
76,415.39
$
82,928.00
$
75,428.57
$
84,485.56
$
74,455.26
$
86,073.26
$
73,495.27
$
87,691.70
$
72,548.39
$
89,341.47
$
71,614.45
$
91,023.20
$
70,693.24
$
92,737.51
$
$
69,784.57
$
83,656.48
11
41
$
85,329.61
12
42
$
87,036.20
13
43
$
88,776.93
14
44
$
90,552.46
15
45
$
92,363.51
16
46
$
94,210.78
17
47
$
96,095.00
48
$
98,016.90
19
49
$
99,977.24
20
50
$
101,976.78
21
51
$
104,016.32
22
52
$
106,096.64
18
10,828.5
7
$
10,936.8
5
$
11,046.2
2
$
11,156.6
8
$
11,268.2
5
$
11,380.9
3
$
11,494.7
4
$
11,609.6
9
$
11,725.7
9
$
11,843.0
4
$
11,961.4
7
$
12,081.0
9
$
12,201.9
0
94,485.05
68,888.27
$
96,266.46
$
68,004.16
$
98,082.42
$
67,132.04
$
99,933.61
$
101,820.7
1
$
103,744.4
5
$
105,705.5
3
$
107,704.6
9
$
109,742.6
9
$
111,820.2
8
$
113,938.2
6
$
116,097.4
1
$
118,298.5
4
$
66,271.75
$
65,423.12
$
64,585.97
$
63,760.14
$
62,945.46
$
62,141.76
$
61,348.90
$
60,566.71
$
59,795.04
$
59,033.74
23
53
$
108,218.58
24
54
$
110,382.95
25
55
$
112,590.61
26
56
$
114,842.42
57
$
117,139.27
28
58
$
119,482.05
29
59
$
121,871.69
30
60
$
124,309.13
31
61
$
126,795.31
32
62
$
129,331.22
33
63
$
131,917.84
34
35
64
65
27
$
134,556.20
$
137,247.32
$
12,323.9
2
$
12,447.1
6
$
12,571.6
3
$
12,697.3
5
$
12,824.3
2
$
12,952.5
6
$
13,082.0
9
$
13,212.9
1
$
13,345.0
4
$
13,478.4
9
$
13,613.2
7
$
13,749.4
1
$
13,886.9
$
120,542.5
0
$
122,830.1
1
$
125,162.2
4
$
127,539.7
7
$
129,963.5
9
$
132,434.6
2
$
134,953.7
8
$
137,522.0
4
$
140,140.3
5
$
142,809.7
1
$
145,531.1
2
$
148,305.6
1
$
151,134.2
$
58,282.65
$
57,541.63
$
56,810.53
$
56,089.22
$
55,377.54
$
54,675.37
$
53,982.56
$
53,298.99
$
52,624.51
$
51,959.01
$
51,302.34
$
50,654.39
$
50,015.04
2
Sum of
Present
Value
$
2,184,768
.87
Certification Cost :
Cost
Incurr
ed
At
Ag
e
30
Cost (Paid
at the
beginning of
the year)
$25,000
The net present value of Natashas salary stream is $2,184,769 - $25,000 = $2,159,769.
She will spend $25,000 of her $100,000 inheritance investment on the Certification program. She will
leave with $100,000 - $25,000 = $75,000 investment value.
Total Net Present Value = $2,184,769 + $75,000 (Treasury Bond) = $2,259,769
A
g
e
3
1
3
2
3
3
3
4
3
5
3
6
3
7
3
8
3
9
4
0
4
1
4
2
4
3
4
MBA
Salary
$
$
$
115,000.00
$
118,450.00
$
122,003.50
$
125,663.61
$
129,433.51
$
133,316.52
$
137,316.01
$
141,435.49
$
145,678.56
$
150,048.92
$
154,550.38
$
Present
Value
$
$
$
104,600.20
$
104,387.37
$
104,174.97
$
103,963.01
$
103,751.48
$
103,540.38
$
103,329.70
$
103,119.46
$
102,909.64
$
102,700.26
$
102,491.29
$
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
4
4
5
4
6
4
7
4
8
4
9
5
0
5
1
5
2
5
3
5
4
5
5
5
6
5
7
5
8
5
9
6
0
6
1
6
2
159,186.90
$
163,962.50
$
168,881.38
$
173,947.82
$
179,166.25
$
184,541.24
$
190,077.48
$
195,779.80
$
201,653.20
$
207,702.79
$
213,933.88
$
220,351.89
$
226,962.45
$
233,771.32
$
240,784.46
$
248,008.00
$
255,448.24
$
263,111.68
$
271,005.03
102,282.76
$
102,074.64
$
101,866.95
$
101,659.68
$
101,452.84
$
101,246.41
$
101,040.41
$
100,834.82
$
100,629.66
$
100,424.91
$
100,220.57
$
100,016.66
$
99,813.15
$
99,610.07
$
99,407.39
$
99,205.13
$
99,003.28
$
98,801.84
$
98,600.80
33
34
35
Cost
Incurr
ed
At
Ag
e
Cost
30
$50,000
31
$50,000
6
3
6
4
6
5
$
279,135.18
$
287,509.24
$
296,134.52
Sum of
Present
Value
$
98,400.18
$
98,199.97
$
98,000.16
$
3,341,760.0
5
Presen
t Value
$50,000
$48,445
PV of Cost of MBA:
Total PV of Costs of MBA: $98,445
The net present value of Natashas Salary Stream $3,341,760.
She will spend all but $1,555 of her $100,000 inheritance investment on the MBA program.
Total Net Present Value = $3,341,760 + $1,555 = $3,343,315.