Cost Benefits Of Cost Benefit Analysis

1976 Words Jun 4th, 2016 8 Pages
Cost-Benefit Analysis
Raviteja Turaga
Dr. Hammad Elbedour
Analysis, Modelling and Design
Date: 06/03/2016.

Cost-Benefit Analysis
Cost-benefit analysis is an economic evaluation whether to go ahead with the project depending on the benefits attained from the invested amount on the project (cost). To perform this analysis, all the inputs (cost) and outputs (benefits) should be measured in the same unit of measurement and at the same time. Generally, the measurement unit is money (usually dollar). We need to measure these at the same time because the dollar value changes time to time. While evaluating the cost benefit analysis we need to take both the tangible and intangible costs in to consideration and classify the costs in one time cost and recurring costs. So these onetime costs and recurring costs need to have relation with time depending on the length of the project. Need to determine the fixed costs and variable costs in both onetime cost and recurring cost. We need to have the relation between time and money as we determine the costs, benefits and useful life of the project is determined on present day, to have a successful cost-benefit analysis. We need to maintain a record for all these costs.
The most commonly used Cost benefit analysis are:
1. Net Present Value (NPV): It uses cost of capital and discount rate to determine the present value of the project.
2. Return of Investment (ROI): It is the ratio of net cash receipts of the project divided…

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