Investment Analysis on the Ph.D.

Course in TEMAP
Submitted to
Prof. Lee, Jongsu

By Group (2)
Seungbae Lee, Kwoen
Lorena Farias, Aung Kyaw Oo

November 30,2006.
Outline

Problem definition

Motivation

Methodology

General Assumptions

Data Sources

Benefits, Costs and Formula applied

Policy Implication

Future Work
Problem Definition

Is it worthy to do Ph.D. in TEMAP for a
typical Korean?

What will be the costs and benefits for
him in trying to pursue for the degree?

In any cases, what should TEMAP take
action upon the result?
Motivation

Many people apply to Ph.D. course in

TEMAP every semester.

Rate of Return ( RoR ) upon completion of
the course is to be calculated after
analyzing the Cost and Benefits.
Methodology

Internal Rate of Return (IRR) concept is applied
as a core method to analyze the case of a
potential Ph.D. student in TEMAP.

Every costs and benefits are taken to present

We found interest rate that do the Present

Worth (PW) of cost and benefit = 0
Outcome from the Project
IRR (7%) is found to be better than the Bank-saving
rate (5%).

PW(i)

300,000,000.00

250,000,000.00

200,000,000.00

150,000,000.00

100,000,000.00

50,000,000.00

0.00

0%
%

%
1%

5%

10

15

20

25

30

35

40

45

50

55

60

65

70

75

80

85

90

95

10
-50,000,000.00

-100,000,000.00

PW(i)
General assumptions
t= 0: In 2006, a Korean man graduated from an
Engineering
College. He is 24 years old now. He applies to TEMAP
and he is admitted.

t= 1: In 2007, he enters TEMAP. He is 25 years old.

t= 6: In 2012, he will have got Ph.D. He is 30 years old

then.

t= 7: In 2013, he starts working. He is 31 years old.

t= 36: in 2042, he retires. He is 60 years old.

There is no inflation during this period.

General assumptions ( Cont’d)

He can select between two types of TMAP

curriculum.
1. Master : 2 year, PH.D : 2 years,
Research : 2 Years
2. Master-PH.D : 3 years Reserch : 3
Years

Under our assumtions, he had better
select No (2).
Data Source

The inflation rate is 3.5% per year. The average

inflation rate is 3.5% for last 5 years

Consumet Price Index
------------------
Year index
2000 100(base Year)
2001 104.1(4.1%↑),
2002 106.8(2.7%↑),
2002 110.5(3.7%↑),
2004 114.5(4.0%↑),
2005 117.6(3.1%↑)

[ Source : National Statistical Office]
Data Source

Average Annual Income

University Graduate : 300,000,000
PH. D : 460,000,000
[ Source : Job Korea( Internet Recruiting
Company) ]
Data Source

The increasing income rates are 7.72%/ Yr

for university graduates (Technicians and
Associate Professionals) and 8.40%/ Yr for
Ph. Ds(Professionals).
[ Source : Analysis of income structure in
2005(Page 15), Ministry of Labor, 2006.
10]
Data Source

The incomes of TMAP students are

900,000 Won/ Month for Master students
and 1,200,000 Won/ Month for Ph. D
Students. These incomes are not taxed.
[ Source : General Assistant System of
TMAP]
Data Source

He has no military Duty. Because there

are many types of military service and
their incomes are hard to be calculated.
Moreover their periods are different and
their incomes are low.
A man with Ph.D.

Salary (Benefit)

Annual– 46 M Won

Growth rate (g) – 4,72%

Formula applied – [ Annual* (1+ g)^ (-1)* ( P/A, g’,30)] *
( P/A, i, 30)* ( P/F,i,6)
A man without Ph.D. ( But a graduate)

Salary ( Cost)

Annual – 30M Won

Growth Rate (g) – 4.06 %

Formula Applied – Annual* (1+ g)^ (-1) ( P/A, g’,36)
Tax on Annual salary

It is assumed that the man has no other

income but his salary.

As tax deduction is so small that it was not
considered in our case.
Salary Tax

annual salary tax

0-20,000,000

8%

20,000,001-40,000,000
17%

40,000,001-80,000,000
26%

80,000,001-

35%
Fees for the TEMAP (Costs)

(1) Admission Fees – 350,000 Won

(2) Semester Fees:
(a) For 1st and 2nd – 3,345,000 Won
(b) From 3rd to 6th – 3,110,000 Won
(c) For the last (6) ones – 150,000 Won

-It is assumed that the pay are released at the end

of previous semester.
-(1+ is)= (1+ i)^ 0.5 ( To calculate semiannual rate)
Fees for the TEMAP ( Cont’d)

(3) Formula applied for all semester fees:

(a) Fees* [ 1+ ( P/F,is,1)]
(b) Fees* ( P/A,is,4)* ( P/F,is,2)
(c) Fees* ( P/A,is,6)* ( P/F,is,5)
Costs in General for the Student

Annual Total = 1,188,000 Won

Lunch -- 260* 2500 = 650,000 Won

Transportation – 260* 1000 = 260,000 Won

Text-Book – 8* 25,000 = 200,000 Won

Notebook – 8* 2,000 = 16,000 Won

Photocopy – 6* 5,000 = 30,000 Won

Pen – 16* 2,000 = 32,000 Won

Formula applied:

Annual* ( P/A,i,6)
( Costs are assumed not to be changed overtime.)
Policy Implication

Mechanisms like;

giving out more scholarship allowance (or)

free tuition (or)

sending the Ph.D. students abroad in turn
(or)

something beneficial for them (during and
after their study period)
should be applied.
Future Work

Detailed taxes are to be considered.

Intangible or immeasurable factors should
be taken into account.

Different approach (or) methodology
should be tried.
Distributed Work-load for the Project

Kwoen– Input Data Collection & Output
Data Verification.

Seungbae Lee– Input Data Validation &
Output Data Verification.

Lorena Farias – Methodology, Data
Analysis and Calculation.

Aung Kyaw Oo – Output Data Preparation,
Paper-writing &
Presentation.
Thank You.

Q & A
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