Introduction
I came across this interesting article on Business Today.
Meenal Goel, a chartered accountant from Delhi, shared her MBA story online last month. She spent two years at a decent B-school from 2019 to 2021.
Total cost of the MBA was about Rs. 39.5 lakh, including fees, living expenses, and the salary she missed out on.
Post-graduation, her pay jumped from Rs. 8 lakh a year to Rs. 16 lakh. Sounds good, right?
But even in 2025, she’s earning Rs. 21 lakh and is still Rs. 25 lakh short of breaking even (education loan). I think many would relate to this cost vs value imbalance felt after spending so much on MBA’s etc.
Just days before Goel’s numbers went viral, Zerodha’s Nikhil Kamath’s comment went viral. He said this in an AMA event, “If you’re 25 and going for an MBA, you must be some kind of idiot.” I know some will agree and many will not.
But this blog post is not about pros and cons of MBA. In this post, we will treat MBA as an investment and we’ll try to calculate its return on investment (ROI).
Idea is to estimate if getting an MBA degree is actually beneficial or not in terms of return on investment? This blog post is an effort to quantify the ROI numbers.
Cash Flow Chart and XIRR Calculation
Key assumptions/details in my MBA ROI Calculation:
- MBA Start Date: Begins June 30, 2019; all timelines flow from here.
- Living Costs: Spread evenly across 4 quarters per year (Rs. 50,000 each in 2019-2020).
- Books & Misc: One-time Rs. 75,000 per year, paid upfront in May.
- Missed Salary (Opportunity Cost): Full Rs. 8 lakh lost each year, charged at year-end (no hikes during MBA).
- Salary Hikes: An average 7.05% annual increase for both MBA and no-MBA paths.
- Post-MBA Pay: Only the “extra” salary (above no-MBA level) counts as cash inflow; starts at Rs. 16 lakh total in 2021.
- Loan Details: Rs. 18 lakh borrowed at 11% interest over 7 years. Monthly EMI is about Rs. 30,700 which means quarterly EMIs of Rs. 92,100 start August 2021 (3 months after job).
- Loan End: EMIs stop May 31, 2028; no payments after.
- XIRR Timing: Measures return quarterly; turns positive by end of year 5 (May 2024), hits 17.14% by loan payoff (May 2028).
| Year | Description | Date | Cash Flow | Remarks | XIRR | Salary (No MBA) | Salary (MBA) |
|---|---|---|---|---|---|---|---|
| 1 | Living Expenses 2019 #Q1 | 30-May-19 | -50,000 | Only Expense (no Job) | – | 8,00,000 | 0 |
| 1 | Living Expenses 2019 #Q2 | 31-Aug-19 | -50,000 | Only Expense (no Job) | – | – | – |
| 1 | Living Expenses 2019 #Q3 | 30-Nov-19 | -50,000 | Only Expense (no Job) | – | – | – |
| 1 | Living Expenses 2019 #Q4 | 29-Feb-20 | -50,000 | Only Expense (no Job) | – | – | – |
| 1 | Books, projects, misc. 2019 | 30-May-19 | -75,000 | Only Expense (no Job) | – | – | – |
| 1 | Opportunity Cost 2019-2020 | 29-May-20 | -8,00,000 | Only Expense (no Job) | – | 8,56,400 | 0 |
| 2 | Living Expenses 2020 #Q1 | 31-May-20 | -50,000 | Only Expense (no Job) | – | – | – |
| 2 | Living Expenses 2020 #Q2 | 31-Aug-20 | -50,000 | Only Expense (no Job) | – | – | – |
| 2 | Living Expenses 2020 #Q3 | 30-Nov-20 | -50,000 | Only Expense (no Job) | – | – | – |
| 2 | Living Expenses 2020 #Q4 | 28-Feb-21 | -50,000 | Only Expense (no Job) | – | – | – |
| 2 | Books, projects, misc. 2020 | 30-May-20 | -75,000 | Only Expense (no Job) | – | – | – |
| 2 | Opportunity Cost 2020-2021 | 29-May-21 | -8,00,000 | Only Expense (no Job) | – | 9,16,776 | 16,00,000 |
| 3 | Post MBA Salary (2021) #Q1 | 31-Aug-21 | 1,70,806 | Cash In (Net Salary Increase due to MBA) | – | – | – |
| 3 | Education Loan EMI (18L, 11%, 7 Years) | 31-Aug-21 | -92,100 | Loan EMI (for 3Months), Yr1 | – | – | – |
| 3 | Post MBA Salary (2021) #Q2 | 30-Nov-21 | 1,70,806 | Cash In | – | – | – |
| 3 | Education Loan EMI (18L, 11%, 7 Years) | 30-Nov-21 | -92,100 | Loan EMI (for 3Months), Yr1 | – | – | – |
| 3 | Post MBA Salary (2021) #Q3 | 28-Feb-22 | 1,70,806 | Cash In | – | – | – |
| 3 | Education Loan EMI (18L, 11%, 7 Years) | 28-Feb-22 | -92,100 | Loan EMI (for 3Months), Yr1 | – | – | – |
| 3 | Post MBA Salary (2021) #Q4 | 31-May-22 | 1,70,806 | Cash In | – | – | – |
| 3 | Education Loan EMI (18L, 11%, 7 Years) | 31-May-22 | -92,100 | Loan EMI (for 3Months), Yr1 | 0.00% | 9,81,409 | 17,12,800 |
| 4 | Post MBA Salary (2022) #Q1 | 31-Aug-22 | 1,82,848 | Cash In (Net Salary Increase due to MBA) | – | – | – |
| 4 | Education Loan EMI (18L, 11%, 7 Years) | 31-Aug-22 | -92,100 | Loan EMI (for 3Months), Yr2 | – | – | – |
| 4 | Post MBA Salary (2022) #Q2 | 30-Nov-22 | 1,82,848 | Cash In | – | – | – |
| 4 | Education Loan EMI (18L, 11%, 7 Years) | 30-Nov-22 | -92,100 | Loan EMI (for 3Months), Yr2 | – | – | – |
| 4 | Post MBA Salary (2022) #Q3 | 28-Feb-23 | 1,82,848 | Cash In | – | – | – |
| 4 | Education Loan EMI (18L, 11%, 7 Years) | 28-Feb-23 | -92,100 | Loan EMI (for 3Months), Yr2 | – | – | – |
| 4 | Post MBA Salary (2022) #Q4 | 31-May-23 | 1,82,848 | Cash In | – | – | – |
| 4 | Education Loan EMI (18L, 11%, 7 Years) | 31-May-23 | -92,100 | Loan EMI (for 3Months), Yr2 | 0.00% | 10,50,598 | 18,33,552 |
| 5 | Post MBA Salary (2023) #Q1 | 31-Aug-23 | 1,95,739 | Cash In (Net Salary Increase due to MBA) | – | – | – |
| 5 | Education Loan EMI (18L, 11%, 7 Years) | 31-Aug-23 | -92,100 | Loan EMI (for 3Months), Yr3 | – | – | – |
| 5 | Post MBA Salary (2023) #Q2 | 30-Nov-23 | 1,95,739 | Cash In | – | – | – |
| 5 | Education Loan EMI (18L, 11%, 7 Years) | 30-Nov-23 | -92,100 | Loan EMI (for 3Months), Yr3 | – | – | – |
| 5 | Post MBA Salary (2023) #Q3 | 28-Feb-24 | 1,95,739 | Cash In | – | – | – |
| 5 | Education Loan EMI (18L, 11%, 7 Years) | 28-Feb-24 | -92,100 | Loan EMI (for 3Months), Yr3 | – | – | – |
| 5 | Post MBA Salary (2023) #Q4 | 31-May-24 | 1,95,739 | Cash In | – | – | – |
| 5 | Education Loan EMI (18L, 11%, 7 Years) | 31-May-24 | -92,100 | Loan EMI (for 3Months), Yr3 | 0.00% | 11,24,665 | 19,62,818 |
| 6 | Post MBA Salary (2024) #Q1 | 31-Aug-24 | 2,09,538 | Cash In (Net Salary Increase due to MBA) | – | – | – |
| 6 | Education Loan EMI (18L, 11%, 7 Years) | 31-Aug-24 | -92,100 | Loan EMI (for 3Months), Yr4 | – | – | – |
| 6 | Post MBA Salary (2024) #Q2 | 30-Nov-24 | 2,09,538 | Cash In | – | – | – |
| 6 | Education Loan EMI (18L, 11%, 7 Years) | 30-Nov-24 | -92,100 | Loan EMI (for 3Months), Yr4 | – | – | – |
| 6 | Post MBA Salary (2024) #Q3 | 28-Feb-25 | 2,09,538 | Cash In | – | – | – |
| 6 | Education Loan EMI (18L, 11%, 7 Years) | 28-Feb-25 | -92,100 | Loan EMI (for 3Months), Yr4 | – | – | – |
| 6 | Post MBA Salary (2024) #Q4 | 31-May-25 | 2,09,538 | Cash In | – | – | – |
| 6 | Education Loan EMI (18L, 11%, 7 Years) | 31-May-25 | -92,100 | Loan EMI (for 3Months), Yr4 | 0.00% | 12,03,954 | 21,01,197 |
| 7 | Post MBA Salary (2025) #Q1 | 31-Aug-25 | 2,24,311 | Cash In (Net Salary Increase due to MBA) | – | – | – |
| 7 | Education Loan EMI (18L, 11%, 7 Years) | 31-Aug-25 | -92,100 | Loan EMI (for 3Months), Yr5 | – | – | – |
| 7 | Post MBA Salary (2025) #Q2 | 30-Nov-25 | 2,24,311 | Cash In | – | – | – |
| 7 | Education Loan EMI (18L, 11%, 7 Years) | 30-Nov-25 | -92,100 | Loan EMI (for 3Months), Yr5 | – | – | – |
| 7 | Post MBA Salary (2025) #Q3 | 28-Feb-26 | 2,24,311 | Cash In | – | – | – |
| 7 | Education Loan EMI (18L, 11%, 7 Years) | 28-Feb-26 | -92,100 | Loan EMI (for 3Months), Yr5 | – | – | – |
| 7 | Post MBA Salary (2025) #Q4 | 01-Jun-26 | 2,24,311 | Cash In | – | – | – |
| 7 | Education Loan EMI (18L, 11%, 7 Years) | 01-Jun-26 | -92,100 | Loan EMI (for 3Months), Yr5 | -0.77% | 12,88,833 | 22,49,331 |
| 8 | Post MBA Salary (2024) #Q1 | 31-Aug-26 | 2,40,124 | Cash In (Net Salary Increase due to MBA) | – | – | – |
| 8 | Education Loan EMI (18L, 11%, 7 Years) | 31-Aug-26 | -92,100 | Loan EMI (for 3Months), Yr6 | – | – | – |
| 8 | Post MBA Salary (2024) #Q2 | 30-Nov-26 | 2,40,124 | Cash In | – | – | – |
| 8 | Education Loan EMI (18L, 11%, 7 Years) | 30-Nov-26 | -92,100 | Loan EMI (for 3Months), Yr6 | – | – | – |
| 8 | Post MBA Salary (2024) #Q3 | 28-Feb-27 | 2,40,124 | Cash In | – | – | – |
| 8 | Education Loan EMI (18L, 11%, 7 Years) | 28-Feb-27 | -92,100 | Loan EMI (for 3Months), Yr6 | – | – | – |
| 8 | Post MBA Salary (2024) #Q4 | 31-May-27 | 2,40,124 | Cash In | – | – | – |
| 8 | Education Loan EMI (18L, 11%, 7 Years) | 31-May-27 | -92,100 | Loan EMI (for 3Months), Yr6 | 5.54% | 13,79,696 | 24,07,909 |
| 9 | Post MBA Salary (2025) #Q1 | 31-Aug-27 | 2,57,053 | Cash In (Net Salary Increase due to MBA) | – | – | – |
| 9 | Education Loan EMI (18L, 11%, 7 Years) | 31-Aug-27 | -92,100 | Loan EMI (for 3Months), Yr7 | – | – | – |
| 9 | Post MBA Salary (2025) #Q2 | 30-Nov-27 | 2,57,053 | Cash In | – | – | – |
| 9 | Education Loan EMI (18L, 11%, 7 Years) | 30-Nov-27 | -92,100 | Loan EMI (for 3Months), Yr7 | – | – | – |
| 9 | Post MBA Salary (2025) #Q3 | 28-Feb-28 | 2,57,053 | Cash In | – | – | – |
| 9 | Education Loan EMI (18L, 11%, 7 Years) | 28-Feb-28 | -92,100 | Loan EMI (for 3Months), Yr7 | – | – | – |
| 9 | Post MBA Salary (2025) #Q4 | 31-May-28 | 2,57,053 | Cash In | – | – | – |
| 9 | Education Loan EMI (18L, 11%, 7 Years) | 31-May-28 | -92,100 | Loan EMI (for 3Months), Yr7 | 10.01% | 14,76,964 | 25,77,666 |
Explanation
Examining the table’s progression.
The MBA’s ROI trajectory indicates a viable long-term investment under specified assumptions. It is taking about 7 years, from the MBA start date, to achieve a positive ROI.
The XIRR reached 10.01% by May 2028 – 9 years from start of MBA. By this time the loan also gets paid in fill. This point forward, he XIRR number will start getting bigger.
It is worth noting that, by May 2028, the return on investment is 10.01% which is an inflation beating return. This return is even comparable to the return generated by a balance advantage mutual funds.
What these numbers are suggesting? It suggests that indeep, MBA is a good investing, but its return will start to show only if you have a waiting period of 7 plus years.
Break Even
Quantitatively, the break-even occurs when cumulative net cash inflows surpass total outflows, including Rs. 23.5 lakh direct costs and approximately Rs. 7.8 lakh in loan interest over 84 months (7 years).
At year 7 (June 2026), the -0.77% XIRR reflects a net position of roughly -Rs. 4.5 lakh. It is driven by persistent EMI deductions against modest quarterly extras of Rs. 2.24 lakh (net increase in salary due to MBA degree).
By year 9, with no more loan EMIs, the 7.05% yearly salary hikes begin compounding fully. This delivers an average annual return that grows your initial Rs. 39.5 lakh investment to 1.8 times its value over the full 9 years.
Sensitivity Analaysis
Sensitivity analysis on key variables is crucial for personalization.
- A 1% reduction in loan interest (from 11% to 10%) elevates terminal XIRR to 11.2% (10. It will shorten the break-even by six months.
- Conversely, if salary hikes average 5% (not 7.05%) due to market slowdowns, XIRR falls to 7.9% as against 10.01%).
- Extending the period to 15 years (Year 2034), projections using the same 7.05% growth yield an XIRR of approximately 12.3%. By this time your you would have already make Rs. 1.2 crore which is equivalent to 3.1x the initial investment, adjusted for time value.
