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Asslgnment 1. It is an appreciating asset that can never be taken away from you.

What is the principles idea of solving this assignment. Anyone knows what is the key points in this case



Asslgnment 1. In this assignment, you will determine the NPV of an investment in an intangible
asset Education is the best performing asset you will ever buy [unless you decide
that a low C average is good enough, then it will be the most expensive,
unproductive asset you buy]. It is an appreciating asset that can never be taken
away from you. An education allows you to command a higher wage, decreases the
amount of time you willbe without a job, and generally leads to consistent wage
increases every year. Not only that, research shows that better educated people are
healthier, have less stress, and tend to live longer lives. That being said, current government policies are threatening the value of that
intangible asset. Namely, the increase in the minimum wage to $20/hr combined
with higher tax rates on incomes over $80k/yr. Your task is to determine the effect of both higher taxes and higher minimum wages
on the NPV of your education. You will determine the NPV of education with and without the change in policies above, and calculate the costs of the policies to the
individual. Assume that you willbe pursing a 4-year degree in 4 consecutive years and have a
40-year working life. You must be explicit about the assumptions you are making
regarding: inflation, tax rates, opportunity costs and discount rates applied. Your
analysis should also include some sort of sensitivity analysis and or scenario
analysis of your assumptions. [i.e. What if the discount rate were 100bps higher/ lower, what if your starting salary were 20% lower, what if wage inflation
were 100bps lower, how many years ofunemployment do you have as a slack
resource, what is the minimum premium over minimum wages that is required just
to break-even under both scenarios]. As a conclusion, advise the government on the effects oftheir policies. Be specific.
Don’t’ just say ‘Do it or Don’t do it’. You must educate them on the full effects of
their policy actions. After they are done staring at themselves in the mirror and
brushing their hair, suggest other policies they could adopt concurrently that would
minimize any negative outcomes. Report Format: Your report should follow proper business format. It should include an Executive
Summary, Introduction, Issue Identification, Quantitative Analysis, Findings [i.e.
discussion of the quantitative analysis], PolicyAlternatives, Analysis of Alternatives,
Policy Recommendation, Conclusions, Appendices 81 References/Bibliography. You
must ensure that large calculations are provided in the appendices and the result
and discussion of such calculations should be in the body ofthe report. Your
assumptions must be clearly stated.

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