Discount rate (i): 2% 4% 8% 12% (i=.02) (i=.04) (i=.08) (i=.12) Years from now (n): 0 10000 10000 10000 10000 1 9804 9615 9259 8929 2 9612 9246 8573 7972 3 9423 8890 7938 7118 4 9238 8548 7350 6355 5 9057 8219 6806 5674 10 8203 6756 4632 3220 20 6730 4564 2145 1037 30 5521 3083 994 334 - Refer to i as the rate”. “discount i.e. that rate at which you could invest $ now in a similarly risky investment. - The value now of the benefits of education (incurred period 0 to R): + + …+ B0 - The value now of the costs of education (incurred periods 0 to g): + + …+ C0 Net Present Value of Investment = + + - …+ … B0 - C0 - this can be calculated given estimates of the Bs and Cs and choice of a discount rate (i).
Discount rate (i): 2% 4% 8% 12% (i=.02) (i=.04) (i=.08) (i=.12) Years from now (n): 0 10000 10000 10000 10000 1 9804 9615 9259 8929 2 9612 9246 8573 7972 3 9423 8890 7938 7118 4 9238 8548 7350 6355 5 9057 8219 6806 5674 10 8203 6756 4632 3220 20 6730 4564 2145 1037 30 5521 3083 994 334 - Refer to i as the “discount rate”. i.e. that rate at which you could invest $ now in a similarly risky investment. - The value now of the benefits of education (incurred period 0 to R): B0 + + …+ - The value now of the costs of education (incurred periods 0 to g): C0 + + …+ Net Present Value of Investment = B0 + + …+ - C0 - … - this can be calculated given estimates of the Bs and Cs and choice of a discount rate (i).