ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -The intangible benefits, sometimes also called “soft benefits”, are the profits ascribable to the improvement project that cannot be reported for formal accounting purposes. These benefits are not included in financial calculations because they are not monetary or are difficult to quantify and calculate.

Detailed explanation-3: -A cost-benefit analysis (CBA) is a tool to evaluate the costs vs. benefits in an important business proposal. A formal CBA lists all project expenses and tangible benefits, then calculates the return on investment (ROI), internal rate of return (IRR), net present value (NPV), and payback period.

Detailed explanation-4: -If the net present value (NPV) of the project is positive, it should be accepted for public investment and if its net present value is zero or negative, it should be rejected.