Katie is 23 years old and graduated in 2016 from Niagara with a degree in Supply Chain Management. She works as a planning analyst at Labatt USA, located in Buffalo, NY. She currently earns a salary of $54,000 per year, and she expects to get salary increases of 3% per year. After your meeting with Katie last week, she has asked for your assistance with these questions:

Education:

She is considering going back to Niagara to get a Masters of Business Administration (MBA). The MBA will take two years, and she expects that it will cost at total of $32,000. She would receive her degree in 2021, when she is 26 years old. She has been told that with a MBA, she would receive a salary increase of $6,000 per year. If she stays with her present company until she retires at age 67, what is the total value of the MBA (assume a 5% interest rate and calculate the present value).

Given the MBA cost, and the present value, is this a good financial move?

Also,

Retirement Planning:

She plans on working until she is 67. She feels that in retirement, she would be comfortable living on 70% of the income she had in the year before she retires. If she gets the MBA, and lives for 25 years in retirement, with a 5% interest rate, how much would she need to have saved to retire? How much does she need to save every month to get to that amount?