The value or worth of an MBA

An associate of mine said he was thinking about getting an MBA, and wanted my opinion on it. Here are some of my thoughts on it.

My wife also has an MBA, and my father earned an MBA back when having one was a relative rarity.

An MBA is definitely worth something. How much it's worth is an open question. At business school, they'd probably tell you to do a discounted cash flow analysis to determine the value of an MBA. Just look at the initial negative cash flows (tuition, no job income) and subsequent higher earnings potential associated with an MBA. Compare this MBA net present value (NPV) with your expected NPV from current employment prospects, and your decision should be clear.

If you already know what this means (NPV, discounted cash flow http://en.wikipedia.org/wiki/Discounted_cash_flow), then getting an MBA may not have much incremental value. If you don't know what this means (I really didn't before I got my MBA), then an MBA is probably worth looking at.

My undergraduate degrees were in Aerospace Engineering and Journalism, so getting an MBA seemed like a good way to learn about business, finance, and accounting. I didn't learn too much taxation as an MBA. I picked up taxation by becoming an IRS Enrolled Agent (you can study for a two-day test for this).

I applied to Stanford and Harvard, but didn't get in. I also applied to my old alma mater, the University of Colorado at Boulder. This seemed like a natural as tuition would be cheap and I could hang out near my family (parents) after spending a few years in Japan. I didn't apply to any other schools since I felt others wouldn't be worth the time to apply or the high tuition. Others obviously may disagree with me on this.

If you already have a business background, an MBA is of marginal value. An MBA is typically a good way to change careers or otherwise add diversity to your background. Still, some jobs (consulting, investment banking) almost require you to have an MBA to open doors, so if you want a job like that it's worth looking into an MBA.

One of the biggest costs associated with an MBA is you lose two years of income while in a full-time program. If you can work, and get an MBA during night school, then this may be a good way to do things.

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