IIFT 2019 Question 7

Question 7

Joseph is in a dilemma. He has been offered a job which would pay him ₹ 80,000 per month for first three years and ₹ 1,20,000 per month for the next three years, and ₹ 1,50,000 per month for the remaining four years. He has also been offered an MBA at a prestigious place and he is considering whether to accept the job or go for the MBA. The first year tuition fee for the MBA program is ₹ 16,00,000 and the second year tuition fee for the MBA program is ₹ 20,00,000. After MBA, he'll get a salary of ₹ 2,00,000 per month for the first four years and then ₹ 2,50,000 per month for the remaining four years. What will be the approximate percentage gain for Joseph in opting for the MBA instead of the job in the 10 years horizon considering no discounting of money ?

Solution

The sum accrued by Joseph if he had taken the job = (80000*3+120000*3+150000*4)*12

=144*$$10^5$$

If Joseph has taken the MBA program, tuition fee for the program = 1600000+2000000

Sum accrued post MBA = 200000*12*4+250000*12*4=21600000

Net amount = 21600000-3600000 = 180*$$10^5$$

Net gain if Joseph had taken MBA over job 10 years down the lane= 36*10^5

Percentage of gain = $$\ \frac{\ 36\times\ 10^5}{144\times\ 10^5}$$

=25%

B is the correct answer.


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Comments
Pranav Arya

1 year, 5 months ago

why did you not subtract the cost of the MBA for both years?

Then this solution of percentage gain is nullified because ignoring a cost input does not make sense
please help

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