To: dalit
Dalit & all,
I don't plan to leverage the entire MBA tuition, but being a realistic person, it woun't be easy to finance a $75,000 expense, and as Dalit referred earlier to sunk costs, we should always look at the bigger picture, alternative costs and gross expenses over the project's timeline before assessing its chances of success.
Therefore, if we look at attaining an MBA degree in a top-10 school, we can't simply ignore the fact that the tuition requires a trmendous expense, and almost surely some sort of financing.
The standard tool for such a financing decision is the ROI or Return On Investment. It basically gives us the number of years after the investment has been made that it would take us to cover the original expense made.
Now, there are several websites that perform this calculation for you, taking into account the lost salary for te 1-2 years your studying full-time without making any money, and also the average rate of salary growth post-graduation (apparently, you should expect a 4.5% growth in your salary every year if your working in finance in London…)
Please refer to: http://www.forbes.com/2005/08/16/cz_05mba_business_schools_gain_calulator.html for Forbes magazine's ROI calculation of an MBA programme.
Be advised that you still have to make some critical assumptions, but this is a good precursor to the time it would take you to repay your MBA tuition.
If anyone has an BusinessWeek MBA Insider account, you can find (and maybe share with the rest of us?) an ROI calculator there as well…
The good news is that my calculations were exaggerated, mainly by accounting for living expenses on one hand, and not acounting for annual growth in salary post-graduation on the other hand.
In any case, Forbes's calculator estimates 2.25 years ROI if you get a GBP 60K salary with a 4.6% annual growth after graduation – much better than my 6 years estimation!!!
