Introduction
The purpose of this project is to evaluate the financial return on investment (ROI) of
pursuing a Master of Business Administration (MBA) degree at Georgia Southwestern
State University (GSW). The analysis assesses total costs, including tuition, fees, and
materials, against expected financial benefits from increased post-graduation earnings.
Using Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period
analysis, this report determines whether the MBA represents a financially sound
investment. The study also considers uncertainty in salary projections, inflation, and
career variability to provide a realistic and data-driven evaluation.
Methodology
This analysis utilizes tuition and fee data from the Georgia Southwestern State University
website, salary data from the Bureau of Labor Statistics (BLS), and compensation data
from PayScale and the Graduate Management Admission Council (GMAC). The total
tuition for the online MBA program is $9,503 for in-state students. An unpaid internship
covered the cost of one three-credit course, reducing tuition by approximately $877.
Book and material costs are estimated at $2,000, bringing total out-of-pocket costs to
$10,626. Since the program is completed online while maintaining full-time employment,
no opportunity costs or living expenses are included.
Pre- and post-MBA salary data were modeled over a 10-year horizon, which aligns with
the long-term career benefits expected from earning an MBA. This period captures the
typical duration in which graduates experience measurable salary growth, career
advancement, and the compounding effects of higher earnings. It also reflects the
timeframe commonly used in cost-benefit and investment analyses to evaluate the
financial return of higher education (GMAC, 2024). The pre-MBA salary of $55,000
reflects the student’s current annual income and serves as the baseline for comparison.
This amount is assumed to grow by 2% annually to account for normal career progression
and inflation. The post-MBA salary begins at $80,000 with a 3% annual growth rate. A
6% discount rate is applied to determine present values, and sensitivity analysis tests
alternative growth and discount rates to assess financial strength. The 6% discount rate
was chosen based on the U.S. Treasury 10-year yield, which represents a risk-free rate of
return. In 2025, Treasury yields averaged between 4.3% and 4.6%, so adding a small
adjustment for personal and market risk makes 6% a reasonable and cautious estimate.
This rate allows future earnings to be converted into today’s dollars and stays consistent
with standard financial analysis practices (U.S. Department of the Treasury, 2025). Table
1.1 summarizes the key variables and assumptions used in this analysis.
Table 1.1 Variable & Assumptions
Variable Value
Program Georgia Southwestern State University (Online MBA)
Tuition & Fees $9,503
Internship Offset -$877 (1 course covered by unpaid internship)
Books &
Materials $2,000 total
Living Costs $0 (rent, utilities, and bills covered by spouse)
Total Personal
Cost $10,626
Pre-MBA Salary $55,000 (grows 2% annually)
Post-MBA $80,000 starting (grows 3% annually)
Salary
Discount Rate 6%
Time Horizon 10 years post-graduation
Work Status Full-time, during MBA (no opportunity cost)
Cost Analysis
Direct Costs
Direct costs consist of tuition, fees, and academic materials. Based on GSW’s tuition
schedule, total tuition equals $9,503. The unpaid internship offset one course valued at
$877. Books and materials add approximately $2,000, bringing total direct costs to
$10,626 (Georgia Southwestern State University, 2025).
Indirect Costs
Because the student continues full-time employment while pursuing the MBA online,
there are no lost wages or opportunity costs. Also, all living expenses are covered by the
student’s spouse, which further enhances the return on investment.
Benefit Analysis
Increased Earnings and Growth Rate
The pre-MBA salary of $55,000, growing by 2% annually, represents a conservative
baseline. Post-MBA salary is projected to start at $80,000, growing 3% per year. These
assumptions align with findings from the Bureau of Labor Statistics (2025), PayScale
(2025), and GMAC (2024), which consistently show MBA graduates in finance-related
careers earn substantially more than their non-MBA peers.
Explanation of Financial Metrics
Financial ratios and valuation models provide quantitative measures of an investment’s
profitability and timing of returns.
Net Present Value (NPV) measures the difference between the present value of cash
inflows (benefits) and cash outflows (costs). It discounts future earnings back to today’s
dollars using a specific rate, here, 6%. A positive NPV means the project adds financial
value.
Internal Rate of Return (IRR) is the discount rate that makes NPV equal to zero. It
represents the investment’s annual rate of return. If the IRR exceeds the required rate of
return (the discount rate), the investment is financially sound.
Payback Period measures the time it takes for cumulative discounted cash inflows to
equal the initial investment. A shorter payback period indicates lower financial risk and
faster recovery of costs. (Brooks, 2020)
Net Financial Benefit Calculation
Using the NPV model, the present value of incremental earnings over 10 years is
approximately $226,439.46. After subtracting the total program cost of $10,626, the
resulting NPV equals $215,813.46. This positive NPV demonstrates that the financial
benefits of earning an MBA far exceed the costs incurred.
IRR and Payback Period Analysis
Table 1.2 NPV, IRR, Payback Period
The Internal Rate of Return (IRR) measures the effective annual rate of return on the
investment where NPV equals zero. For this MBA project, the IRR is calculated at
approximately 240.4%, indicating an extremely high rate of return relative to traditional
investments such as stocks or bonds. This means that the MBA’s benefits grow more than
twice the investment cost each year, on average, over the projection period.
The Payback Period measures how long it takes for cumulative discounted benefits to
recover the initial investment. In this analysis, the payback period is only one year,
meaning that within the first year after completing the MBA, the cumulative increase in
income offsets the entire cost of the degree. This quick payoff emphasizes the exceptional
financial efficiency of pursuing the MBA at GSW.
Uncertainty Consideration
Uncertainty in future earnings is addressed through sensitivity analysis. Scenarios with
different growth (2%, 3%, 4%) and discount rates (6%, 8%) are tested. The results
indicate that even under conservative conditions, the NPV remains strongly positive,
confirming that the MBA is a financially worthwhile pursuit.
Table 1.3 Sensitivity Analysis
Growth Discount Total PV Net Present
Rate Rate Benefits Value
6% $199,575.93 $188,948.93
2% Growth Discount
8% $181,404.05 $170,778.05
2% Growth Discount
6% $226,439.46 $215,813.46
3% Growth Discount
8% $204,921.78 $194,295.78
3% Growth Discount
6% $254,692.45 $244,066.45
4% Growth Discount
8% $229,632.06 $219,006.06
4% Growth Discount
Conclusion
Overall, the financial indicators reflect strong profitability and long-term stability. The
sensitivity analysis confirms that even under less favorable assumptions, the MBA at
GSW remains a positive long-term investment. The inclusion of IRR and Payback Period
analysis further supports that pursuing an MBA at Georgia Southwestern State University
is a highly profitable and low-risk financial decision. With a one-year payback period and
an IRR exceeding 200%, the degree yields outstanding returns. With low tuition costs, no
loss of income, and consistent salary growth expectations, the MBA offers excellent
potential for building wealth and advancing in a finance career. From both quantitative
and qualitative perspectives, the MBA investment provides significant professional and
financial value.
Appendix: Summary of Key Assumptions and Results
Variable Value
Program Georgia Southwestern State University
(Online MBA)
Total Cost (after internship offset) $10,626
Pre-MBA Salary $55,000 (2% annual growth)
Post-MBA Salary $80,000 (3% annual growth)
Discount Rate 6%
Time Horizon 10 years post-graduation
Work Status Full-time, during MBA (no opportunity
cost)
Net Present Value (NPV) $215,813
Internal Rate of Return (IRR) 240.4%
Payback Period 1 year
References
Georgia Southwestern State University. (2025). Tuition and fees for residents. Retrieved
from [Link]
Bureau of Labor Statistics. (2025). Occupational outlook handbook: Financial managers.
U.S. Department of Labor. Retrieved from [Link]
PayScale. (2025). Average MBA graduate salary. Retrieved from
[Link]
Graduate Management Admission Council (GMAC). (2024). Corporate Recruiters
Survey. Retrieved from [Link]
Brooks, R. M. (2020). Financial management: Core concepts (4th ed.). Pearson.
U.S. Department of the Treasury. (2025). Daily Treasury yield curve rates. U.S.
Department of the Treasury.
[Link]
Federal Reserve Bank of Atlanta. (2025). Wage Growth Tracker. Federal Reserve Bank
of Atlanta. [Link]