Based upon the learning activities in Topic 2, calculate the Internal Rate of Return (IRR), Net Present Value (NPV) and Profitability Index (PI) of earning an MBA at Brandman University assuming the...

Question 1
        Year    0    1    2    3    4    5
        Initial Cost    -20,000
        Increase in Salary        10,000    10,000    10,000    10,000    10,000
        Net Cash Flow    -20,000    10,000    10,000    10,000    10,000    10,000
        Cost of Capital    15%
        NPV    13,521.55
        IRR    41%
        PI    1.68
Question 2
        Pros of NPV Method:
1. The method is easy to use.
2. The method also accounts for the size of the investment.
3. The method uses cash flows instead of net earnings to demonstrate the actual use of cash unlike non-cash expenses which are included in the net earnings.
4. The method recognizes the time value of money, unlike payback period.
        Cons of NPV Method:
1. An appropriate discount rate shall be selected which poses a problem because in realistic scenarios, it's not possible to have a constant discount over the life of an investment.
2. The risk of the project might increase during its life, making NPV method unviable.
        Pros of MIRR:
1. MIRR eliminates the problem of reinvestment, which is the case with using the IRR technique of...