Cost Benefit Analysis

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CostBenefit Analysis

Student’sname:

TO:UNCLE MARK

P.OBOX: 799 E DRAGRAM SUITE 5A

DearSir,

Hello,I hope you have been doing good, am writing this letter to presentyou my job evaluation as a management consultant. The analysisconsists of a 20 years’ assessment of the course that I have chosento undertake for my career development. Present values of theearnings were compared with the total cost of the education to arriveat a conclusion in this evaluation.

Costanalysis

Tostart with, I will acquire a loan of $20,000 at an interest rate of5% 5% per annum to finance part of my studies at the college. Thecareer that I have chosen to undertake requires a Bachelor’s Degreein Management, and I intend to undertake the course in one of theaccredited colleges in the United States. The course will be MS. inManagement The estimated cost of the entire college education amounts$34,000. Entry into the management circle of a company of choice,would be my greatest pleasure.

Benefits

Thebenefits will depend on factors such as the level of education andthe working experience. In this research the earnings for bothundergrad and graduate level have been analysed. However, the valuesprovided have been adjusted since they appears unrealistic due to thecurrent labour force and the unemployment rate in the United States,the expected annual salary will range from USD20,000 low andUSD25,000 for medium. Calculating the present value of these benefitsfor a period of twenty years, it amounts to $486,500 for undergradwhile that of the graduate amounts to $705,000.

Costbenefit analysis

NPVhas been used to compare the benefits with the cost on annual basis.Both undergrad and graduate schemes reveals that the employmentcreates more benefit and therefore the opportunity should be grabbed.The Net present value for undergrad is $486,500 which is the entireamount of the present value of the benefits while that of thegraduate is (705,000 – 34,000) = $671,000. The cost benefitanalysis is as presented in the table below

Cost benefit analysis

UNDERGRAD ONLY

GRADUATE DEGREE

Starting Salary

Mid-Career Salary

Low Salary

Median Salary

&nbsp

Expected Monthly Loan Payment

Discount Rate

$20,000

$25,000

$30,000

$40,000

&nbsp

$230

5%

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Year After Grad School

UnderGrad Only Earnings

Earnings of Grad School

Benefits (Grad-Undergrad)

PV of Benefits

Costs of Grad School

&nbsp

In Grad School

$34,000

&nbsp

&nbsp

&nbsp

($34,000)

&nbsp

1

$20,250

$30,500

$10,250

$7,620

($2,630)

&nbsp

2

$20,500

$31,000

$10,500

$7,995

($2,505)

3

$20,750

$31,500

$10,750

$8,364

($2,386)

4

$21,000

$32,000

$11,000

$8,728

($2,272)

5

$21,250

$32,500

$11,250

$9,086

($2,164)

6

$21,500

$33,000

$11,500

$9,439

($2,061)

7

$21,750

$33,500

$11,750

$9,787

($1,963)

8

$22,000

$34,000

$12,000

$10,131

($1,869)

9

$22,250

$34,500

$12,250

$10,470

($1,780)

10

$22,500

$35,000

$12,500

$10,804

($1,696)

11

$22,750

$35,500

$12,750

$11,135

($1,615)

12

$23,000

$36,000

$13,000

$13,000

&nbsp

&nbsp

13

$23,250

$36,500

$13,250

$13,250

&nbsp

&nbsp

14

$23,500

$37,000

$13,500

$13,500

&nbsp

&nbsp

15

$23,750

$37,500

$13,750

$13,750

&nbsp

&nbsp

16

$24,000

$38,000

$14,000

$14,000

&nbsp

&nbsp

17

$24,250

$38,500

$14,250

$14,250

&nbsp

&nbsp

18

$24,500

$39,000

$14,500

$14,500

&nbsp

&nbsp

19

$24,750

$39,500

$14,750

$14,750

&nbsp

&nbsp

20

$25,000

$40,000

$15,000

$15,000

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

TOTALS

$486,500

$705,000

$252,500

$229,558

($56,942)

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

NPV:

$ 900,558

&nbsp

Conclusion

Fromthe above analysis, it clear that the benefit outweigh the costs andtherefore it is much advisable to undertake the course. The benefitsare also expected to increase with the level of education. At amaster’s level and with 10 years’ experience, the pay scale showsthat the earnings can go to up to $70,000 per annum which signifiesan extremely high benefits.

JoanAnnet.

Speakernotes

TheEconomics of Sugar Babies

Theindustry of the Sugar babies and Sugar daddies has been offering theopportunities to most women in the United States and across theworld. Due to the current high unemployment rates, women have triedto seek more chances in the market to sustain their living. Thefamily background of the young ladies has also being a key driver tosugar baby’s-sugar daddy’s relationship. For example, where onecomes from a poor background, she is much likely to be convinced bythe greedy sugar daddies who are ready and willing to support themfinancially with compensation of sex in return.

Youngwomen and most especially ladies in the institutions of higherlearning have become keen for cash from sugar daddies in the name of‘sponsors’. The vast majority of unemployed young women end up inprostitution for search of income to cater for their dailyconsumption and also to sustain their education. A recent study basedin Las Vegas revealed that two-third of the sugar babies havegraduated with no education debt. This is because there would be noany sugar daddy whom would want his sugar baby to face financialdifficulties and therefore, they always want to settle their bills intime.

Accordingto SeekingArrangment,alternative dating is the new way for finding relationships. Money isthe key challenger and decision-maker when it comes to luring apotential partner. Money is given in forms of incentives or boosters.Therefore, young women compromise their lives by attracted tomaterial wealth and this is why the demand for SugarBaby services areescalating.

NomiMalone is in a great dilemma of either maintaining her regular jobthat pays $8dolar per hour or seeking arrangements earning $1000 perweek. It could be wiser for her to focus on the future rather thanenjoying only in the short run but suffers in the long run. It ismuch better for her to struggle now with the college bills and debtwaiting for bright future but not engage in baby sugar-sugar daddyrelationship. Definitely, Malone will opt to work as a SugarBabybecause the benefits outweighs the effort that she would otherwisespend in the regular job that pays $8/hr. The benefits ofSeekingArrangements will enable Malone to cater and sustain hereconomic and educational costs, as her purchasing power will beincreased. $1000 a week for just 10 hours outweigh the effort doneand the gains are just enough for her and also surplus for othermiscellaneous expenses (McGuigan&amp Moyer, 2013).Moral concerns might shift a cost v/s benefit decision, and this isbecause, the moral values of the society disagree with theinvolvement of money in dating. Obviously, SugarBabies are seen arepeople who lack conventional morals and thus the cost of it is“questionable.” However, the benefits are very materialistic andenticing. In a world with a distribution of moral convictions, therise of services like SeekingArragements affect the CB decision forwomen to work as SugarBabies. The contemporary world has beenentangled into the marvel of the socialmedia world. Alot of moral decadence happens in the so-called “Online community”,where such private activities are shielded from the public’s eye. It is thus easier for younger men and women to find a “haven” insuch websites and sustain their lifestyles. So, the conservativemoral convictions have not stopped people from seeking the servicesof online dating, but it has re-shifted the focus into privacy.

Ifmore college girls are engaging in such behaviours, it does makeeconomic sense because their purchasing power is boosted with thefrequent supply of money (McGuigan&amp Moyer, 2013).On the other hand, the government does not gain anything from thisactivities, because there is no revenue collection

Itis therefore clear that the main supplier in the sugar baby’smarket are the university and the college ladies with sex being themajor product. The government should come up with appropriatestrategies of funding the education, to the less fortune ladies tominimize the risk that they engage into search for money oremployment.

Reference

McGuigan,J. Moyer, R. (2013). Managerial Economics 12thEd. Mason South Western: Cengage Learning.