The opportunity cost of college refers to the potential benefits of going to college and giving up (relative to not going to college). It includes economic cost, time cost and psychological cost. The following is our formula for evaluating the monetary cost in the opportunity cost of going to college.
Opportunity cost = net present value of income-net present value of expenditure
Nth year expenditure net present value =
Upfront expenditure+1 annual expenditure× (1+5%)-1+2 annual expenditure× (1+5%)-2+...+n annual expenditure× (1+5%)-n
Net present value of the nth annual income = 65438+ the 0th annual income× (1+5%)-1+the 2nd annual income× (1+5%)-2+...+the nth annual income× (1+5%)-n
Among them, 5% is the discount rate based on China's economic growth rate (generally estimated to be between 5% and 7%, we have determined it as 5%).