Task1:-Calculate the human resource value of mechanical department (ME) of Indus International University using Lev & Schwartz

model .You have to take the retirement age of employee as 60 years. Selection of discount rate is to be decided by you. Ans. The Lev and Schwartz model is used for measuring the HR value in Indus international university. The Lev and Schwartz Model: The Lev and Schwartz Model value human capital as the present value of future earnings from employment. This model is widely used by many Indian firms. HR value is the present value of the future earnings up to the retirement age, and the future earnings are discounted by the weighted average cost of capital for the past years. The present value of a person who is 'Y' years old can be determined using the following formula:
.

Vr t r I (t ) /(1 r )t r
T

Where Vr = the human capital value of a person r years old; I(t) = the persons annual earnings up to retirement; r = a discount rate specific to the person; T =retirement age Indus international university: There are 7 employees in Mechanical department in Indus international university. We apply the Lev & Schwartz model to calculate the value of human capital as the present value of future earnings from employment.

Assumption for the model: 1. Retirement age: 60 year 2. Opportunity cost: 9% ( ROI (% p.a.) is 9% on Fixed Deposit in PNB Bank) 3. Annual increment: 3%

Name

Designation

Age

Salary (per month) Rs.

Present value of future earnings ( Rs.) 14,76,248.61

Mr. Arvind Chouhan

Asst. professor

32

32,000

Mr. Harish Kumar Banga

Asst. Professor

29

29660

12,30,620.72

Mr. Pankaj Chandan

Asst. Professor

28

29660

11,85,459.12

Mr. Ujjwal Kumar Sen

Jun. asst. Professor

23

17000

5,56,594.09

Mr. Jaswant Singh

Jun. Asst. Professor

27

17000

6,53,932.08

Mr. Sahil

Jun. Asst. professor

26

17000

72,10,144.84

Mr. Vivek Ramdas Desal

Asst. professor

26

29660

10,46,714.82

Total

23,72,44,678.50

According to lev & swarchz model the value of present value of future earnings of Mr. Arvind is 14,76,248.61 , Mr. Harish Kumar Banga is 12,30,620.72 , Mr. Pankaj Chandan is 11,85,459.12 , Mr. Ujjwal Kumar Sen is 5,56,594.09 , Mr. Jaswant Singh is 6,53,932.08 , Mr. Sahil 72,10,144.84 , Mr. Vivek Ramdas Desal is 10,46,714.82 for the Indus international university if they work in Indus international university to their retirement age.

The total value of present value of future earnings of mechanical department of Indus international university is 23,72,44,678.50.

Conclusion: Human resource accounting provides quantitative information about the value of human resource, which helps the top management to take decisions regarding the adequacy of human resources. Through lev & swarchz model we calculate the value of human resource in the organization.

Webliography: www.iiuedu.co.in http://www.ukdissertations.com/dissertations/project-management/human-resourceaccounting-and-indian-practice.php#ixzz2TzgFcvW9 http://mahidachintan.com/documents/Dec-2012/37.BhavinBadiyani.pdf https://www.pnbindia.in/en/ui/DepositInterestRates.aspx