1. Group 8 EGR 403 – Project #2 Investing in Education Rosenkrantz 8.24.2004 Hung Ly Reynaldo Sarmiento, Jr. Amish Sheth Sam Uyeno

2. Scenarios 1. Mechanical Engineer invests in a BS before entering work force w/ starting salary $49,480 2. Mechanical Engineer invests in a MS before entering work force w/ starting salary $67,869 3. Mechanical Engineer invests in a PhD before entering work force w/ starting salary $81,000

3. Analysis Criteria  Minimum Attractive Rate of Return ~ 4 -6%  UCLA vs. Stanford tuition fees  Amount of time in the workforce  14, 30, 39 & 47 years  Starting salary

4. Present Worth Analysis

5. Present Worth Analysis con’t.

6. Present Worth Analysis

7. Present Worth Analysis con’t.

8. Incremental Analysis Incremental Analysis With UCLA Fees

9. Incremental Analysis Incremental Analysis With Stanford Fees

10. Comparing Incremental and Present Worth Results UCLA Tuition Fees, MARR = 4%

11. Conclusions BS is preferred in the short run, up to 14 years of work. MS is preferred beyond 14 years with exception to low MARR and tuition costs. PhD is rarely preferred.

12. What makes a PhD preferable?

13. References Essentials of Engineering Economic Analysis CPST, data derived from Abbott, Langer & Associates Dr P. Rosenkrantz http://www.ucla.edu http://www.stanford.edu http://www.engineeringsalary.com (useful website that observes similar trends found in published references)