Rates of Return
The algebraic method for calculating the rate of return, i, is based on the equality of instantaneously incurred costs, C, and the stream of returns to education, R
_{t}
, t = 1, ... ,
, expressed in terms of present value. That is
C =
_{t}
R
_{t}
(1+i)
^{-t}
C =
_{t}
R
_{t}
(1-i)
^{-t}
C =
_{t}
R
_{t}
(1+i)
^{-}
C =
_{t}
R
_{t}
(1-i)
^{-}
Next question
Exit