Question

Korra is 40 years old and Sokka is 20 years old. Both work in the same position in the same company and have been laid off permanently. If they enroll together in the same college, to study the same. Given the human capital model, do they have the same net value present?

Answer 1

The investing in human capital is much systematic and sceintific thing which is more valuable in each organisations and institution.mainly labour cost or physcial cost is an indirect cost different than the direct cost like stationery expense etc.. The investment in human capital also an importent one which also giving some cash inflows. The capital budgeting methods like net present value used for calculating this labour capital cash inflows and outflows and giving the acceptance rejection decision. Mainly net present value consider the time value of money or considering present value factor in the calculation of cashflows. It is total of the discounted or present value of the cashflows. Which can give more clear idea about labour capital investment returns or cashflows which help to create more value or growth to the firm.
NPV is calculated by net present value of inflow and adding with the negative value of intial investment of cash outflow.

Here ,as per the human capital model this situation is not giving same net present value inflow is mainly same but the period of time is very different based on age.