Cost–benefit analysis (CBA), sometimes called benefit–cost analysis (BCA), is a systematic process for calculating and comparing benefits and costs of a project, decision or government policy. CBA has two purposes:
1. To determine if it is a sound investment/decision (justification/feasibility),
2. To provide a basis for comparing projects. It involves comparing the total expected cost of each option against the total expected benefits, to see whether the benefits outweigh the costs, and by how much.
- Expressed in money term with "net present value"
- Adjusted for time value of money.
Closely related, but slightly different, formal techniques include
3. cost-effectiveness analysis,
...Cost-effectiveness analysis (CEA) is a form of economic analysis that compares the relative costs and outcomes (effects) of two or more courses of action.
4. cost–utility analysis,
...Cost–utility analysis (CUA) is a form of financial analysis used to guide procurement decisions. The most common and well-known application of this analysis is in pharmacoeconomics, especially health technology assessment (HTA).
5. economic impact analysis,
...Cost–utility analysis (CUA) is a form of financial analysis used to guide procurement decisions. The most common and well-known application of this analysis is in pharmacoeconomics, especially health technology assessment (HTA).
6. fiscal impact analysis and
7. Social return on investment (SROI) analysis.
Social return on investment (SROI) is a principles-based method for measuring extra-financial value (i.e., environmental and social value not currently reflected in conventional financial accounts) relative to resources invested.
8. "net present value"
...of a time series of cash flows, both incoming and outgoing, is defined as the sum of the present values (PVs) of the individual cash flows of the same entity.
9. Present value:
... Present value, also known as present discounted value, is the value on a given date of a payment or series of payments made at other times.
10. Time value of money
...is the value of money figuring in a given amount of interest earned over a given amount of time. The time value of money is the central concept in finance theory.
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