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Cost Benefit Analysis

Cost Benefit Analysis. As economists, we are usually called in when the project is already designed. C-B Analysis should be mandatory for bigger projects .

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Cost Benefit Analysis

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  1. Cost Benefit Analysis As economists, we are usually called in when the project is already designed.

  2. C-B Analysis should be mandatory for bigger projects • Since costs and benefits to the society at large are often different from the costs and revenues of an enterprise, a farm development project, the establishment of an agro-industry factory – economists have an important role in the design phase • Most of you will probably be working with smaller projects – still a C/B analysis can be useful.

  3. Three analytical steps • Cash Flow Analysis • Economic Analysis – sensitivity analysis • Financial Analysis

  4. Cash Flow Analysis

  5. NET CASH FLOW • So we have got the NCF; what next?

  6. Terms used • NPV Net present value • Cost Benefit Ratio B/C, or B*/C* • IRR Internal Rate of Return The mathematics and Excel.

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