Investment in education Flashcards
1
Q
what is the formula for Present Value (PV)
A
PV = FV/ 1+r
2
Q
what is the formula for Net Present Value (NPV)
A
NPV = MB - MC
3
Q
what is MRR
A
marginal rate of return
4
Q
why is there a graduate wage premium
A
Human capital
- Uni students learn skills with raise their productivity
- Employers value these skills
- students invest in learning the skills
Signalling
- People are different in terms of their innate abilities
- Only higher ability students get into uni and graduate with good marks
- students invest in order to signal their higher ability to potential employers
