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egr403hw11team3.pptx - Cal Poly Pomona

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egr403hw11team3.pptx - Cal Poly Pomona Powered By Docstoc
					   Team 3
  Eric Aube
Joseph Tirona
   Given: A recent graduate of the Mechanical
    Engineering Department at Cal Poly Pomona
    wants to know if he should get his MBA while
    working part time, get his Master’s in
    Mechanical Engineering as a full-time student,
    or simply get a job and start saving for his
    future.
   Find: Research on starting salaries, ROR on
    investments, inflation rates, annual salary
    increases, etc.
   Education: Bachelor’s in Mechanical Engineering
    (BSME)
   Starting Salary: $53,000
   Average Annual Increase in Salary: 7%
   Rate of Return (ROR) on Investments: 2%
   Cost of Living: $30,000 for the first year, with a
    adjustment for inflation in all subsequent years
   Taxes: Done according to bracket for a single filer
    on page 394 (Table 12-1a)
   Inflation: 4%
   Tuition Costs: None
   Education: Bachelor’s in Mechanical Engineering
    (BSME) with an MBA
   Starting Salary: $65,200
   Average Annual Increase in Salary: 9%
   Rate of Return (ROR) on Investments: 2%
   Cost of Living: $30,000 for the first year, with a
    adjustment for inflation in all subsequent years
   Taxes: Done according to bracket for a single filer
    on page 394 (Table 12-1a)
   Inflation: 4%
   Tuition Costs: $10,000 annually for 3 years
   Education: Master’s in Mechanical Engineering
   Starting Salary: $67,248
   Average Annual Increase in Salary: 10%
   Rate of Return (ROR) on Investments: 2%
   Cost of Living: $30,000 for the first year, with a
    adjustment for inflation in all subsequent years
   Taxes: Done according to bracket for a single
    filer on page 394 (Table 12-1a)
   Inflation: 4%
   Tuition Costs: $14,000 annually for 2 years
$800,000


$600,000
                                                        Income

$400,000

                                                        Living
$200,000                                                Expenses+'Bachelors
                                                        1'!$D$2:$D$41

      $0                                                Taxes
            23 26 29 32 35 38 41 44 47 50 53 56 59 62
-$200,000


-$400,000
$2,000,000


$1,500,000


$1,000,000
                                                          Income
                                                          Living Expenses
  $500,000
                                                          Taxes
                                                          Tuition
        $0
              23 26 29 32 35 38 41 44 47 50 53 56 59 62
 -$500,000


-$1,000,000
$2,500,000

$2,000,000

$1,500,000
                                                          Tuition
$1,000,000                                                Income

  $500,000                                                Living Expenses
                                                          Taxes
        $0
              23 26 29 32 35 38 41 44 47 50 53 56 59 62
 -$500,000

-$1,000,000
$20,000,000


$15,000,000


$10,000,000                                                                                                      FW - Bachelor's
                                                                                                                 FW MBA
 $5,000,000                                                                                                      FW MSME


        $0
                                    2.0%




                                                                                                   7.0%
                                                                                                          9.0%
                      1.0%
                             1.5%


                                           2.5%
                                                  3.0%
                                                         3.5%
                                                                4.0%
                                                                       4.5%
                                                                              5.0%
                                                                                     5.5%
                                                                                            6.0%
              -1.0%




-$5,000,000
   An increase inflation rate causes a decrease in
    total future worth.
   The impact of inflation is severe; thus, you
    have to be careful to ensure that you are saving
    enough and getting enough ROR to combat
    any rises in inflation.
   Inflation impacts all three scenarios fairly
    equally; but MSME still wins because its total
    FW is higher than all the others for the same
    inflation rates.
$40,000,000

$35,000,000

$30,000,000

$25,000,000
                                                           FW - Bachelor's
$20,000,000
                                                           FW - MBA
$15,000,000                                                FW - MSME
$10,000,000

 $5,000,000

        $0
              52   57   59   60   62   63   65   67   72
   The degree that you have significantly
    increases the rate at which you gain future
    worth. (MSME > MBA > BSME)
   For every additional year that you work, you
    gain significantly in your total FW.
   (In addition, for every year earlier that you
    begin to save, you gain a very fruitful amount
    in total FW.)
   The degree that you attain increases the rate at
    which you gain total FW: therefore, MSME
    wins this category.
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$25,000,000                                                           FW - Bachelor's
$20,000,000                                                           FW - MBA
$15,000,000                                                           FW - MSME

$10,000,000
 $5,000,000
        $0                                                      10%
              0%
                   1%
                        2%
                             3%
                                  4%
                                       5%
                                            6%
                                                 7%
                                                      8%
                                                           9%
   The higher your rate of return on investments,
    your total FW increases exponentially.
   For every ROR that we found, getting your
    MSME is the most beneficial scenario in trying
    to get the most out of your FW.
$20,000,000
$18,000,000
$16,000,000
$14,000,000
$12,000,000
$10,000,000   FW - BSME

 $8,000,000   FW - MBA
 $6,000,000   FW - MSME
 $4,000,000
 $2,000,000
        $0
   For each starting Salary, getting a MSME is still
    the best option.
   This is further magnified when one considers
    that those graduates of MSME programs
    usually have HIGHER starting salaries than
    those graduates with only a BSME or MBA
    anyway.
$18,000,000
$16,000,000
$14,000,000
$12,000,000
$10,000,000
              FW - BSME
 $8,000,000   FW - MBA
 $6,000,000   FW - MSME
 $4,000,000
 $2,000,000
        $0
   Any increase in one’s Cost of Living impacts
    each scenario equally. Thus, MSME is still the
    best option because it had the highest FW
    originally.
$35,000,000

$30,000,000

$25,000,000

$20,000,000                                             FW BSME
                                                        FW MBA
$15,000,000
                                                        FW MSME
$10,000,000

 $5,000,000

        $0
              4%   5%   6%   7%   8%   9% 10% 11% 12%
   Unlike all the other scenarios, all three lines fall
    on top of each other.
   Whichever job has the highest annual salary
    increase, (in terms of percentage), is the best
    option.
   We will call this a wash; but generally, MSME
    graduates have a higher annual salary increase
    than those with a BSME. (10% vs. 7%)
   MSME’s also have a very slightly higher
    increase than those with an MBA. (10% vs. 9%)
   Get an Master’s in Mechanical Engineering!

				
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