ECONOMICS
COST BENEFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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new shoes
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all the money you saved
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showing off your new shoes
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None of the above
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Detailed explanation-1: -For example: Build a new product will cost 100, 000 with expected sales of 100, 000 per unit (unit price = 2). The sales of benefits therefore are 200, 000. The simple calculation for CBA for this project is 200, 000 monetary benefit minus 100, 000 cost equals a net benefit of 100, 000.
Detailed explanation-2: -What is Cost-Benefit Analysis Formula? The formula for benefit-cost ratio is: Benefit-Cost Ratio = ∑ Present Value of Future Benefits / ∑ Present Value of Future Costs.
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: -Build a framework. First, create a framework that lays out the goals of your analysis, your current situation, and the scope of what your analysis will include. List and categorize costs and benefits. Estimate values. Analyze costs vs. Make recommendations. 10-Nov-2022