Presentation on theme: "Using Present Value to compare different levels of education and their relative effects."— Presentation transcript:
Using Present Value to compare different levels of education and their relative effects
Is College Worth it? Are they better off? Present value.
A Stable Economy Constant CPI/Inflation. Constant Wage Increases. No major recessions. Job Security Always employed. Job availability out of college. Retirement at age 65.
College Assumptions: Starting school at 18 years of age. University of Akron representative of average college. Tuition frozen. 4 Years of college for BS degree.
W 0 = Average Starting Wage g = Average Wage Increase d = Average Inflation n = Number of years
Calculation of starting wage. Calculation of wage increases. Calculation of inflation. Number of years used. Average Inflation Rate:2.65% Average Wage Increases for High School Graduates:3.54% Average Wage Increases for College Graduates:3.98% Average Wage Increase for Master's:4.10%
Greater understanding of world around them Scholarships Company’s Expense Social Status Job security College Experience
Assumptions: Two years to complete Master’s Degree Took average of credit hours University of Akron rates Assumed age was (Under 24 a Master’s is rare) With College BS Degree High School GraduateMaster's Degree Total Wages Until Age 65:$1,485,450.26$952,778.03$3,125, Difference in Lifetime Wages:$532, $532,672.23$1,639, Total Wages for first 12 Years:$188,999.48$207,614.30$304,749.29
Money POV: it is worthwhile, however: The ultimate decision lies with the consumer.