Anonymous asked in Business & FinancePersonal Finance · 6 months ago

What investment equation do I need? Investment / personal money question?

I need to do a calculation to see if going back to school for an degree is worth it. Specifically, I need to analyze:

-When I will be able to make the money back

-When my investment will turn into income

-How my debt will factor in to current debt

-What this means practically for me over the next 10 years

I would prefer an equation, because that way I can apply it as my choice of graduate school changes.

Here is the information:

Program Cost: 40,000

Program Duration: 2.5 years

My current debt payment: $330 a month, due over next 6.5 years

My current "extra" income: $300 a month

Expected increase in income in 5 years: $200 more a month

Expected increase in income in 8 years: $400 more a month

What equation will help me calculate and think about this?


5 Answers

  • 6 months ago

    Unless you are going because you love the subject so much you can't possibly live without being at that level, OR you have an employer who is going to help you get that degree in some way, either by giving you a part time position or paying for some of it, you're probably not looking at an "investment".

    I wouldn't do it on the off chance you might get a job in a certain field- I've seen far too many people get advanced degrees who were looking for any decent position for 6 months, and took whatever they could find a couple times after that before they came even close to what they meant to do. And besides that, politics and the economy in their current state, I wouldn't take that leap right now for anything.

  • 6 months ago

    This is a discounted cash flow/present value matter. The method of analysis is too complicated to explain in Yahoo Answers, but if you can find a college-level or maybe an advanced financial analysis text, it can explain how this is done. I learned this technique in graduate school. Be aware that your assumptions may not be valid, and things could change in the economy, your career, etc.

    In conclusion, there is a way to solve this, but it probably won't be valid in the real world.

  • 6 months ago

    Only you can figure that out - or pay a financial planner big bucks to do it (which would be a waste of money). This is a math problem so just step through it using your best assumptions. A POINT - how much salary will you be losing while in graduate school? And also, what is the cost of borrowing the money you need for college and living expenses? {Maybe you listed those things, but not in a format I could understand.}

    Source(s): accountant
  • 6 months ago

    There is absolutely no way you are going to find a simple answer to your question in a way that would conclusively tell you whether you should go back to school for a degree. A degree in what? When? Will jobs be available then for people with that kind of degree? At what salary? What other debt will you have by then (school loan)? How reliable is the data you have?

    The most important of these questions is "what kind of degree" will you have. If you get a degree in Marketing, for example, you will be competing with thousands of other people got these "easy" degrees and are also looking for a relatively few jobs for that degree. On the other hand, if your degree is in Mechanical Engineering, for example, your prospects for finding a good well-paying job is significantly higher.

    It's a well-known fact that, on average, people with college degrees make significantly more money over their lifetime than those who don't.

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  • 6 months ago

    There are too many variables. I went to college, but I doubt many kids today would do it like I did it. I had two jobs all the way through college. I didn't have a car but had a Honda step-through (moped) for five years - driving in the snow. My last year I could rarely buy meat. So I graduated with what would be a $20,000 debt in today's money

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