ECONOMICS
COST BENEFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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all true
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(1) and (3) are correct
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(1) a technique for analyzing costs and benefits that involves estimating and evaluating the benefits associated with alternative actions to be taken
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(2) analysis of the benefits in the form of money as a result of education with all costs incurred for education
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(3) analysis of financial benefits as a result of education (usually measured by income) with all costs incurred for education
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Detailed explanation-1: -What Does a Benefit-Cost-Ratio Over 1.0 Suggest? A reading over 1.0 suggests that on a broad level, a project should be financially successful; a reading of 1.0 suggests that the benefits equal the costs; and a reading below 1.0 suggests that the costs trump the benefits.
Detailed explanation-2: -What Is A Cost-Benefit Analysis? A cost-benefit analysis is the process of comparing the projected or estimated costs and benefits (or opportunities) associated with a project decision to determine whether it makes sense from a business perspective.
Detailed explanation-3: -Net Present Value and Benefit-Cost Ratio are the two most common methods of doing a cost-benefit analysis. The NPV model chooses the project with the highest NPV. The benefit-cost ratio model chooses the project with the highest benefit-cost ratio.
Detailed explanation-4: -It is a technique that is used to appraise and evaluate projects. The basic idea in CBA is quite simple: first, identify the costs and benefits of a project and. then measure them incomparable units (say in terms of money, and expressed in a single currency).