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    Calculating the economic cost in the given case

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    Consider a student who has finished her undergraduate degree and is considering pursuing an MBA as a full-time student. The cost of the 2-year MBA program she is considering is $45,000 for tuition. If she doesn't become a full-time MBA student, her next best alternative is to accept a job she's just been offered, which pays $30,000 per year. Moreover, she can expect a 5% salary increase each year with this employer. Apply the concept of opportunity cost to calculate the economic cost (as opposed to the accounting cost, which would not factor in opportunity cost) of pursuing the MBA over the course of the next two years

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    Solution Preview

    Cost of Tuition fees = $45000

    In case he goes for Job,
    Salary in first year = $30000
    Salary in second ...

    Solution Summary

    Solution describes the steps to calculate the economic cost in the given case.