1. Personal Investment Options Higher Education: Bachelor’s vs. Master’s Team 8 Jade Thiemsuwan – Organizer Nicholas Sakamoto – Techie Andy Yau – Summarizer Markel Vessup - Summarizer EGR403: Asset Allocation and Technical Decision Making

2. Scenario 1 Tom, a 22-year old graduating Chemical Engineer at Cal Poly Pomona chooses to go straight to work after his Bachelor’s Degree. He graduates with good standing and has a great attitude and work ethic.

3. Scenario 2 Jerry, a 22-year old graduating Chemical Engineer at Cal Poly Pomona chooses to pursue a Master’s Degree immediately after his Bachelor’s Degree. He graduates with good standing and has a great attitude and work ethic.

4. The Bachelor’s Degree Cost of tuition Time Job advancement Jobs after retirement Salary

5. The Master’s Degree Cost of tuition Time Job advancement Jobs after retirement Salary

6. Comparison: Education Cost and Time Bachelor’s $19200 – 4 years Master’s $19200 – 4 Years AND $73400 – 2 Years Total: $92600 6 Years

7. Comparison: Entry-Level Jobs Bachelor’s Entry-Level Associate Engineer $57361 Master’s Entry-Level Associate Engineer $68561 Difference of: $68561 – $57361 = $11200

8. Comparison: Job Opportunity Bachelor’s Associate to Principle Master’s Up to Manager/Director Post-retirement careers

9. Spreadsheet parameters Major spreadsheet base-case parameters include: BachelorMaster Starting Salary$59,361$68,561 Annual Salary Increase3.0%4.0% 401k Annual ROR6.0% Retirement Age62 Annual savings10% Company Match Contribution6% Same Promotion Schedule--

10. Analysis Assumptions Based on testimonies from industry, the promotion schedule for a chemical engineer with a bachelor or master’s degree does not differ. e.g. 2 yr, 5yr, 10yr, etc. The engineer with the Master’s degree does not surpass management level. e.g. not CEO or President, etc. No initial sign-on bonuses have been accounted for Savings plan assumes only a 401k. e.g. No IRA, etc.

11. Analysis Results The Master’s Degree does (and should) make more in total savings by age 62 However, the Bachelor behind by $604,000 (about 16%) Our sensitivity shows that little needs to be done for the Bachelor to save the equivalent amount by retirement

12. Sensitivity Analysis Percent Saved Total Savings 10.00%$3,789,664.57 10.50%$3,908,091.58 11.00%$4,026,518.60 11.50%$4,144,945.62 12.00%$4,263,372.64 12.50%$4,381,799.66 13.00%$4,500,226.67 Different 401k Plan 401k Rate of ReturnTotal Savings 6.00%$3,789,664.57 6.15%$3,916,263.87 6.30%$4,047,900.32 6.45%$4,184,788.38 6.60%$4,327,151.93 6.75%$4,475,224.63 Company Contribution (still 10% Savings) Company Percent Total Savings 6%$3,789,664.57 7.00%$4,026,518.60 8.00%$4,263,372.64 9.00%$4,500,226.67

13. Sensitivity Analysis Annual Increase in Percentage Saved Increase Final Year % Saved Total Savings 0.00%10.00% 0.05%12.00% $4,000,745.56 0.10%14.00% 4211826.5 5 0.15%16.00% $4,422,907.55 Increase in Annual Income Gain Annual Income GainTotal Savings 3.00%$3,789,664.57 3.20%$3,904,185.29 3.40%$4,023,744.06 3.60%$4,148,597.27 3.80%$4,279,015.30 4.00%$4,415,283.29

14. Resources United States Bureau of Labor and Statistics 2007 $59,361 Bachelor’s $68,561 Master’s Testimonies 1. ~$57000 Bachelor’s ~$65000 Master’s 2. ~$60000 Bachelor’s ~$65000 Master’s Chemical Engineering & News' 2006 $67,200 Bachelor’s $79000 Master’s Engineer Salary.com 2008 $67,504 Bachelor’s $71,028 Master’s