Team 3
Eric Aube
Joseph Tirona
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Given: A recent graduate of the Mechanical
Engineering Department at Cal Poly Pomona
wants to know if he should get his MBA while
working part time, get his Master’s in
Mechanical Engineering as a full-time student,
or simply get a job and start saving for his
future.
Find: Research on starting salaries, ROR on
investments, inflation rates, annual salary
increases, etc.
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Education: Bachelor’s in Mechanical Engineering
(BSME)
Starting Salary: $53,000
Average Annual Increase in Salary: 7%
Rate of Return (ROR) on Investments: 2%
Cost of Living: $30,000 for the first year, with a
adjustment for inflation in all subsequent years
Taxes: Done according to bracket for a single filer
on page 394 (Table 12-1a)
Inflation: 4%
Tuition Costs: None
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Education: Bachelor’s in Mechanical Engineering
(BSME) with an MBA
Starting Salary: $65,200
Average Annual Increase in Salary: 9%
Rate of Return (ROR) on Investments: 2%
Cost of Living: $30,000 for the first year, with a
adjustment for inflation in all subsequent years
Taxes: Done according to bracket for a single filer
on page 394 (Table 12-1a)
Inflation: 4%
Tuition Costs: $10,000 annually for 3 years
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Education: Master’s in Mechanical Engineering
Starting Salary: $67,248
Average Annual Increase in Salary: 10%
Rate of Return (ROR) on Investments: 2%
Cost of Living: $30,000 for the first year, with a
adjustment for inflation in all subsequent years
Taxes: Done according to bracket for a single
filer on page 394 (Table 12-1a)
Inflation: 4%
Tuition Costs: $14,000 annually for 2 years
$800,000
$600,000
Income
$400,000
Living
Expenses+'Bachelors
1'!$D$2:$D$41
$200,000
Taxes
$0
23 26 29 32 35 38 41 44 47 50 53 56 59 62
-$200,000
-$400,000
$2,000,000
$1,500,000
$1,000,000
Income
Living Expenses
$500,000
Taxes
Tuition
$0
23 26 29 32 35 38 41 44 47 50 53 56 59 62
-$500,000
-$1,000,000
$2,500,000
$2,000,000
$1,500,000
Tuition
$1,000,000
Income
Living Expenses
$500,000
Taxes
$0
23 26 29 32 35 38 41 44 47 50 53 56 59 62
-$500,000
-$1,000,000
$20,000,000
$15,000,000
$10,000,000
FW - Bachelor's
FW MBA
FW MSME
$5,000,000
-$5,000,000
9.0%
7.0%
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
-1.0%
$0
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An increase inflation rate causes a decrease in
total future worth.
The impact of inflation is severe; thus, you
have to be careful to ensure that you are saving
enough and getting enough ROR to combat
any rises in inflation.
Inflation impacts all three scenarios fairly
equally; but MSME still wins because its total
FW is higher than all the others for the same
inflation rates.
$40,000,000
$35,000,000
$30,000,000
$25,000,000
FW - Bachelor's
$20,000,000
FW - MBA
$15,000,000
FW - MSME
$10,000,000
$5,000,000
$0
52
57
59
60
62
63
65
67
72
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The degree that you have significantly
increases the rate at which you gain future
worth. (MSME > MBA > BSME)
For every additional year that you work, you
gain significantly in your total FW.
(In addition, for every year earlier that you
begin to save, you gain a very fruitful amount
in total FW.)
The degree that you attain increases the rate at
which you gain total FW: therefore, MSME
wins this category.
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$25,000,000
FW - Bachelor's
$20,000,000
FW - MBA
$15,000,000
FW - MSME
$10,000,000
$5,000,000
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
$0
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The higher your rate of return on investments,
your total FW increases exponentially.
For every ROR that we found, getting your
MSME is the most beneficial scenario in trying
to get the most out of your FW.
$20,000,000
$18,000,000
$16,000,000
$14,000,000
$12,000,000
$10,000,000
FW - BSME
$8,000,000
FW - MBA
$6,000,000
FW - MSME
$4,000,000
$2,000,000
$0
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For each starting Salary, getting a MSME is still
the best option.
This is further magnified when one considers
that those graduates of MSME programs
usually have HIGHER starting salaries than
those graduates with only a BSME or MBA
anyway.
$18,000,000
$16,000,000
$14,000,000
$12,000,000
$10,000,000
FW - BSME
$8,000,000
FW - MBA
$6,000,000
FW - MSME
$4,000,000
$2,000,000
$0
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Any increase in one’s Cost of Living impacts
each scenario equally. Thus, MSME is still the
best option because it had the highest FW
originally.
$35,000,000
$30,000,000
$25,000,000
$20,000,000
FW BSME
FW MBA
$15,000,000
FW MSME
$10,000,000
$5,000,000
$0
4%
5%
6%
7%
8%
9% 10% 11% 12%
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Unlike all the other scenarios, all three lines fall
on top of each other.
Whichever job has the highest annual salary
increase, (in terms of percentage), is the best
option.
We will call this a wash; but generally, MSME
graduates have a higher annual salary increase
than those with a BSME. (10% vs. 7%)
MSME’s also have a very slightly higher
increase than those with an MBA. (10% vs. 9%)
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Get an Master’s in Mechanical Engineering!