After earning your BA, you have to decide whether to take a job that will pay you $45,000 per year or spend an additional two years earning an MBA. If you decide to pursue the graduate degree, your annual expenses for tuition, books, board, and lodging will be $32,000. You have been offered a scholarship for $10,000 per year, but to pay the remaining $22,000 per year, you would have to cash in savings bonds from your grandparents that have been earning $500 in interest per year. The annual opportunity cost of earning your MBA is:

Question

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The opportunity cost includes the salary you forego ($45,000), the net cost of education ($22,000 after the scholarship), and the lost interest from the savings bonds ($500), totaling $67,500.

After Earning Your BA, You Have to Decide Whether to Take