Gavin Carter: What is an MBA Worth?

3 Pages Posted: 21 Oct 2008

See all articles by Wei Li

Wei Li

University of Virginia - Darden School of Business; Centre for Economic Policy Research (CEPR)

Joseph Jordan

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Abstract

At 26 years old, Gavin Carter was facing a dilemma. He had just received the good news that he had been accepted to the MBA program at a prestigious University. But he had also been informed recently that he was going to be promoted within the equity research department at his current employer, a prominent investment bank. Although he was genuinely excited at the prospect of advancing his long-term prospects by going to business school, Carter needed to find out if his investment in an MBA education would pay off.

Excerpt

UVA-F-1478

Gavin Carter: What is an MBA Worth?

Gavin Carter was ignoring the beeps from his BlackBerry® handheld as he stared out the window of his apartment at the New York City skyline and contemplated his current situation. He had just received the good news that he had been accepted to the MBA program at a prestigious university just outside Washington, D.C. The dilemma was that he had also recently been informed that he was going to be promoted within the equity research department at his current employer. While he was genuinely excited at the prospect of advancing his long-term prospects by going to business school, Carter had begun to question whether the payoff was truly worth it.

A recent study of college graduates that Carter had read on the subway a few weeks before had made the case that the rate of increase in the value of education had slowed considerably since the early 1990s, even as college tuition had been steadily rising. What Carter needed to find out was whether this trend was true for MBA programs as well, and how that would impact his personal situation.

Carter thought that going to business school was equivalent to making an investment in himself. Like any investment, investing in his own education would involve paying tuition and fees (capital expenditure) now in order to increase his earnings in the future. Would an investment in an MBA pay off? What were the opportunity costs of that particular investment? With those questions in mind, Carter sat down and began to assess what the net present value (NPV) of his investment in an MBA might be.

Gavin Carter

. . .

Keywords: Investment Education MBA Valuation Return

Suggested Citation

Li, Wei and Jordan, Joseph, Gavin Carter: What is an MBA Worth?. Darden Case No. UVA-F-1478. Available at SSRN: https://ssrn.com/abstract=909910

Wei Li (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
804-243-7691 (Phone)
804-243-7681 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/li.htm

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Joseph Jordan

affiliation not provided to SSRN

No Address Available

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