85 Appendix 8: Overview of investment analysis measures Appendices Appendix 8: Overview of investment analysis measures The appendix provides context to the investment analysis results using the simple hypothetical example summarized in Table A8.1 below. The table shows the projected benefits and costs for a single student over time and associated investment analysis results.44 Assumptions are as follows: Benefits and costs are projected out 10 years into the future (Column 1). The student attends the institution for one year, and the cost of tuition is $1,500 (Column 2). Earnings foregone while attending the institution for one year (opportunity cost) come to $20,000 (Column 3). 44 Note that this is a hypothetical example. The numbers used are not based on data collected from an existing college. Table A8.1: Example of the benefits and costs of education for a single student 1 2 3 4 5 6 Year Tuition Opportunity cost Total cost Higher earnings Net cash flow 1 $1,500 $20,000 $21,500 $0 -$21,500 2 $0 $0 $0 $5,000 $5,000 3 $0 $0 $0 $5,000 $5,000 4 $0 $0 $0 $5,000 $5,000 5 $0 $0 $0 $5,000 $5,000 6 $0 $0 $0 $5,000 $5,000 7 $0 $0 $0 $5,000 $5,000 8 $0 $0 $0 $5,000 $5,000 9 $0 $0 $0 $5,000 $5,000 10 $0 $0 $0 $5,000 $5,000 Net present value $21,500 $35,753 $14,253 Payback period (years) 4.2 Benefit-cost ratio 1.7 Internal rate of return 18.0%
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