What is the purpose of a Cost-Benefit Analysis?

The purpose of a Cost-Benefit Analysis (CBA) is to evaluate the pros and cons of a decision, project, or change in a venture. It helps in identifying the most optimal and beneficial proposals by comparing the aggregate costs and benefits. The results of this analysis are used to determine if the benefits outweigh the costs. It also aids in computing net present values, running sensitivity analysis, and proposing recommendations. The overall value for money of a project or proposal can be summarized using the Benefit-Cost Ratio (BCR), calculated as the discounted value of benefits divided by the discounted value of costs.

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Using this slide, set the framework, decide on costs benefits, determine and categorize, project, monetize and discount costs and benefits, compute net present values, run sensitivity analysis and propose a recommendation. With this slide, you can compare aggregate costs and benefits. Remember that the results of the aggregate costs and benefits analysis should be compared quantitatively to see if the benefits outweigh the costs. Summarize the overall value for money of a project or proposal with this slide which helps to calculate Benefit-Cost Ratio (BCR). The formula is as follows: BCR = Discounted value of benefits/ Discounted value of costs.

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Cost Benefit Analysis

When in doubt about a decision, a potential project or changes to a venture, you need a reliable evaluation tool. Our Cost-Benefit Analysis presentati...

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