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# The True Value of YOUR MBA (v 2.0) MBA ROI Calculator

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Current Student
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The True Value of YOUR MBA (v 2.0) MBA ROI Calculator [#permalink]

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29 Dec 2008, 15:02
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This post was
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Version 2.0 Available Now!

As the first round of admits have started to trickle in and as round 2 applicants start to submit their applications, I thought I would update this document.

For those that aren't familiar with what this is, here's the original version and the overview for your reference:

the-true-value-of-your-mba-64239.html

I made a handful of changes since I created this model last summer, but below are the two major changes that I have made:

1) Updated fields to incorporate internship earnings

2) Ability to easily compare a part-time v. full-time MBA program (from a financial perspective)

A couple of comments and feedback that were suggested from last time that I did not specifically address (and my reasons for choosing not to do so).

1) Debt service of student loans. So here’s the deal. This model assumes that tuition is paid upfront (i.e., during school). This is unrealistic for the vast majority of folks on the board here, and probably most students in general. However, I prefer to take a highly conservative approach when it comes to figuring out when I will break even. I suppose this is a worst-case scenario (i.e., makes the payback period look longer than it should), but in my mind, I’d rather err on the side of a longer payback period than a shorter payback period.

So why does this matter when tuition is paid? It is more expensive to pay for tuition with today’s dollars than it is X years down the road. For instance, if you are on a 10-yr repayment plan paying $600 a month -$600 in today’s terms is a lot more money than it is 5, 6, or 7 years from now (and for simplicity’s sake, let’s ignore fluctuations in the value of the US dollar). If you don’t believe me, ask yourself this: Would you rather I gave you $600 today or$600 in 6 years from now. Good, I’m glad we’re on the same page. For more detail on this, I explain this in general assumption #3 on the Instructions worksheet. In that section, I’ve also included instructions for a scenario that could be applicable for folks that go into investment banking, private equity, or any other very high paying post-MBA job.

2) Taxes. I received some comments saying that tuition is paid with after-tax dollars, but salary is listed in before tax dollars. Sure, fair enough. If you think that it is appropriate to adjust for this, multiple your salary by (1 minus your expected tax rate) and plug that in for your post-grad salary. I chose not to do this for the base case scenario, but again, I’ve tried to make this model flexible enough where you can put in whatever assumptions YOU think are appropriate.

Updated directions are included on the first worksheet of the excel file. Let me know if you have any questions. I’ll be happy to address any issues/comments that may be related to your particular circumstances. Also, if you think there are any improvements that could be made to this for future versions, I’ll see what I can do to incorporate them. And again, I'm human, so if you find any errors, let me know and I'll correct them. Enjoy and let me know what you think.
Attachments

File comment: Value of an MBA v2.0
Value of an MBA v2.0.xls [70 KiB]

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The True Value of YOUR MBA: http://gmatclub.com/forum/103-t64239
GMATClub's Unofficial Chartered Financial Analyst thread: http://gmatclub.com/forum/103-t63245
How Much Weight Does the CFA Carry with Admissions: http://gmatclub.com/forum/103-t68059

Last edited by bb on 03 Jun 2011, 15:40, edited 1 time in total.
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29 Dec 2008, 15:05
you could upload the new version in this thread and have the link as a reference to the old version.

thanks:)
Current Student
Joined: 27 Jul 2007
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29 Dec 2008, 15:16
1
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Praetorian wrote:
you could upload the new version in this thread and have the link as a reference to the old version.

thanks:)

Done!
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The True Value of YOUR MBA: http://gmatclub.com/forum/103-t64239
GMATClub's Unofficial Chartered Financial Analyst thread: http://gmatclub.com/forum/103-t63245
How Much Weight Does the CFA Carry with Admissions: http://gmatclub.com/forum/103-t68059

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03 Jan 2009, 18:19
Well, I doubt post MBA salary (default) is correctly represented here ( specially long term). An MBA seems unattractive to a realistically optimistic imagination for a banker or a consultant with $125K current salary (non-mba)....whereas, it should be the other way... Thoughts? Current Student Joined: 27 Jul 2007 Posts: 872 Location: Sunny So Cal Schools: CBS, Cornell, Duke, Ross, Darden Followers: 12 Kudos [?]: 202 [0], given: 4 Re: The True Value of YOUR MBA (v 2.0) [#permalink] ### Show Tags 04 Jan 2009, 20:42 mindgame wrote: Well, I doubt post MBA salary (default) is correctly represented here (specially long term). An MBA seems unattractive to a realistically optimistic imagination for a banker or a consultant with$125K current salary (non-mba)....whereas, it should be the other way...

Thoughts?

The numbers that I have plugged in are as a sample (i.e., illustrative purposes only) so that you know which data points you should enter ON YOUR OWN. As I said in my original post and in the directions tab, this is supposed to look at the value of YOUR MBA. So plug in YOUR numbers. It doesn't matter if you go to top 50 or top 5, it's all based on the assumptions that you put in. However, if you are assuming \$140,000 starting salary for a top 50 school, well then "garbage in, garbage out."

This is not designed to be the ultimate solution for everyone. The main point is to give you an idea what your situation looks like. If your NPV is 5 years - great. If it's 10, that's also great, since we are all concerned with the long run. Even if it's >20years, that may be OK for some people because of the intangible aspects of going to school (e.g., network, formal business education, career switch, etc.).

Hope that helps.
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The True Value of YOUR MBA: http://gmatclub.com/forum/103-t64239
GMATClub's Unofficial Chartered Financial Analyst thread: http://gmatclub.com/forum/103-t63245
How Much Weight Does the CFA Carry with Admissions: http://gmatclub.com/forum/103-t68059

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10 Jan 2009, 14:50
My analysis:

And the policy recommendation:

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14 Jan 2009, 20:12
rhyme wrote:
My analysis:

lol@happinesspercentages
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02 Jun 2011, 19:59

Just today got posted on WSJ: http://online.wsj.com/article/SB1000142 ... 97754.html

Quote:
Overall, 57% of full-time M.B.A. students in the U.S. had offers by mid-March, compared with 40% a year earlier, according to a Graduate Management Admission Council survey released last month of 905 companies and 127 business schools nationwide. And the improvement continues as the latest school year closes out.

"More companies are wanting to dance," said Cheri Paulson, director of the center for career development at Babson College's F.W. Olin Graduate School of Business. The school saw listings for full-time jobs increase 39% over last year.

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Re: The True Value of YOUR MBA (v 2.0) MBA ROI Calculator [#permalink]

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23 Jun 2014, 23:05
Hello from the GMAT Club MBAbot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
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Re: The True Value of YOUR MBA (v 2.0) MBA ROI Calculator [#permalink]

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06 May 2016, 17:33
Hello from the GMAT Club MBAbot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
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Re: The True Value of YOUR MBA (v 2.0) MBA ROI Calculator [#permalink]

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16 Nov 2016, 22:21
BW has posted the Real Cost of the MBA (sort of real). They pegged the top 10 at around 350-450K taking the opportunity cost into consideration
http://www.bloomberg.com/news/articles/ ... -of-an-mba

Attachment:

mba cost.png [ 66.58 KiB | Viewed 573 times ]

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Re: The True Value of YOUR MBA (v 2.0) MBA ROI Calculator   [#permalink] 16 Nov 2016, 22:21
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