Human assets reflect the current value of all future earnings of an individual. There are three factors to consider when we decide the values of human assets: education, skills and health. When an individual is employed, his human assets are decided by these three factors, and one of them is skills. An unskilled worker is only treated as a basic commodity to earn just the minimum wage. A skilled worker, however, will earn more salary because of his skills.
The reason for an individual to have skills is mainly because of the education he receives. The benefit of education is normally greater than its cost. That explains why the skilled workers can earn more than unskilled workers. During the human life cycle, for the skilled workers, the value of his human asset goes up for some time, then as the individual gets older, the human asset may depreciate and drop, until the retirement. For the unskilled workers, the tendency of his human asset is in a continuous dropping cycle as he gets older and his health is getting worse.
Generally speaking, more education and more skills will enhance your human assets.
Question 2: From ch. 8: What factors should you consider when you aren’t sure whether to buy or lease a car? What are the advantages of leasing over purchasing in general? Why are more people leasing? Is leasing less costly than purchasing? Explain. Discuss the advantages and disadvantages of leasing a car.
According to Altfest (2017), there are several factors to consider when deciding whether to buy or lease a car which include how long the lessee wants to lease the vehicle, its age, the cost of time, inspection standards, mileage charges, lease obligation, and ability to fund monthly payments. These can minimize expenses such as depreciation, extra charges on mileage or maintenance for lessees based on their preferences. Leasing is appealing for many because of its lower short-term costs, tax benefits, and the advantages from up to date properties. For individuals with insufficient capital, leasing grants them the assets they need to use with possibly no down payment and upfront sales tax charges. In addition, if they only need a car, for example, for a short period of time, leasing may actually be cheaper than purchasing. Besides, if the assets are used for business purposes, tax advantages can apply (Patero, 2019). Both the lessor and lessee can also benefit from leasing new assets as they are more durable, require less maintenance, and eliminate the risk of obsolescence. However, in general, leasing costs more than buying in the long run mostly because the lessor needs profit to cover administrative expenses. As discussed above, other drawbacks can also arise from the contract which lessees need to take into consideration to minimize.