Benefit Cost Analysis

A Benefit - Cost analysis provides a quick and effective method to determine the economic viability of a project. As the name implies, it is prepared by dividing the cash benefits derived from the project by the cash inputs required by the project. A project is considered potentially viable if the Benefit/Cost Ratio is greater than 1.0. Any project with a ratio of less than 1.0 is considered uneconomic and would be abandoned.

Elements of the Benefit - Cost Analysis

Data must be provided for the following components of the analysis:

Required Data

Appropriate Checklist

Market size

 Marketing Checklist

Production costs

 Manufacturing Checklist

Capital requirements

 Manufacturing Checklist

Opportunity cost of capital

 Hurdle Rate Of Return

Adoption rate

 Market Adoption

You may use the checklists to develop the assumptions required to provide the input data required to complete the analysis.