...A cost benefit analysis is done to determine how well, or how poorly, a planned action will turn out. Although a cost benefit analysis can be used for almost anything, it is most commonly done on financial questions. Since the cost benefit analysis relies on the addition of positive factors and the subtraction of negative ones to determine a net result, it is also known as running the numbers. Cost Benefit Analysis A cost benefit analysis finds, quantifies, and adds all the positive factors. These are the benefits. Then it identifies, quantifies, and subtracts all the negatives, the costs. The difference between the two indicates whether the planned action is advisable. The real trick to doing a cost benefit analysis well is making sure you include all the costs and all the benefits and properly quantify them. Should we hire an additional sales person or assign overtime? Is it a good idea to purchase the new stamping machine? Will we be better off putting our free cash flow into securities rather than investing in additional capital equipment? Each of these questions can be answered by doing a proper cost benefit analysis. Example Cost Benefit Analysis As the Production Manager, you are proposing the purchase of a $1 Million stamping machine to increase output. Before you can present the proposal to the Vice President, you know you need some facts to support your suggestion, so you decide to run the numbers and do a cost benefit analysis. You itemize the benefits. With...
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...------------------------------------------------- Cost Benefit Analysis [ECON 453] ------------------------------------------------- Assignment II Aditya Gurung Dr. T.M. Horbulyk April 2, 2012 1. Based on the article, describe as best you can: (i) The reference group for the cost benefit analysis Reference group for the cost benefit analysis (CBA) refers to the set of persons whose gains and losses are to be included as directly relevant to the project decision-making process. It is a sub set of people who will be benefited or affected by the implementation of the project. In the case of Bolu Mountain Tunnel project, the set of people who will directly benefit from the implementation of the project are the people who can now avoid traveling by Bolu Mountain Passage (D100 highway) as they can get to there destination by traveling through the tunnel in much safer conditions along with reduced travel time. (ii) The purpose of the study The purpose of any social CBA is to examine and assess whether or not the social benefits of the proposed policy or project outweigh its social cost. By doing so, it can assist decision-making by facilitating the allocation of resources to their most valuable application. In the case of given article, the purpose of the study is to conduct the CBA of the Bolu Mountain Tunnel Project and examine if the project is worth to be implemented. (iii) The estimated project life over which the project is evaluated The estimated project life...
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...Description: Look around you. Is there anything which you see which seems like a riddle but when looked at with the lens of costs and benefits makes sense? List one such example. This example is from personal experience. I have recently changed my job. The day before joining I bought a branded hand bag for say price X knowing very well that the end of season sale was likely to start in the next fifteen days. I was also aware from past experience that I would easily get a discount of 25% on waiting till that period. I went ahead and bought it in spite of a nudging feeling of making an irrational purchase and having indulged myself. Now in the light of cost benefit analysis my decision appears rational as at that time I had not considered the benefits drawn on purchasing: 1. My old hand bag had worn out and I was uncomfortable in carrying it to the new workplace. With the new bag I felt more confident and positively disposed for the new assignment. Changing jobs is a big step and there is an underlying concern about being able to adjust to the new environment and culture. Not that the bag would help me adjust but psychologically I felt more confident. 2. I had been exploring the markets for a suitable hand bag for a long time as mentioned above the old one had worn out. At the time of purchase I had liked the handbag in the first look itself. I did not want to wait till the end of season sale for two reasons. First as I was taking up a new job and I knew I will have to run...
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...| Be sure to review the live lecture recording (available Now) Appendix A: 1. The use-case diagram shown in Figure A-1 F captures the Student billing function but does not contain any function for accepting tuition payment from students. Revise the diagram to capture this functionality. Also, express some common behavior among two use cases in the revised diagram by using include relationships.Appendix B:1. When should you use an Agile method, and when should you use an engineering-based method for developing a system? Support your answer. Course Project:Create a Use-Case Diagram for the CRM System following the UML guidelines in Appendix A of the textbook. * Doc sharing Project Workbook - Week 7 folder, has instructions on how to create a Use Case using Visio (but you can use any MS Office application). * Need to include processes for Record Customer Activities, Send Promotions, Generate Point Redemption Coupons, and Generate Customer Reports processes. * The hint is to look at the external entities, processes, and data stores from the Level 0 DFD on page 187. * Actors: * The Customer is a source and a sink - and should be shown as one Actor on our Use Case. * The three data stores will be the other actors: * Customer Activity Records. * Marketing Database. * Product Database. * Process: Each of the sub process on page 187 will become a Process reflected in the Use Case. * So we have a total of four processes. * Send...
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...someday. Watches, in particular, have always been preserved nicely in cupboards for decades even if not working The Target customers: Both new and existing consumers as old watches of any brand are accepted. This offer also allows customers to exchange watches in any condition, which is a definite crowd-pleaser. * Cost :Consumer felt they were earning that 20 per cent discount on exchange old watch to new . While for the company Strategically it promotes multiple purchase and ownership of watches * Benefits: For consumer there is an element of engagement with the consumer as the consumer is giving away old stuff for which he/she would not have got any value otherwise. In addition, it also bringing happiness to the underprivileged with this initiative. While for companies sales almost double compare to the pre-scheme period (Consumers prefer a brand over others if the offering is interesting). Brand's preference score goes up (it is about 70% during discounts).Tactically, as an activity the exchange offer helps to bring in more footfalls. Engage in a social cause by donating selected watches that can be refurbished are used for charity Other Cost and Benefits: * Why company promote discount sale during festival season * Why credit card companies give cash bash * Why companies give cash discounts to the suppliers * Why most mobile apps are free to download &...
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...The benefits of cost-benefit analysis to improving business decisions Cost-Benefits Analysis (CBA) is the process of using theory, data, and models to study products, exchanges, and activities for measuring relevant ideas and alternative solutions in order to support decision-makers in choosing the most appropriate alternative. This paper explores how CBA may best be used, focusing on the effectiveness of CBA during the early phase of a program life-cycle in ensuring that there are worthwhile alternatives in making investment decisions. It also examines the measures and the methodology used to develop a CBA, addresses the accuracy and reliability of CBA, and identifies techniques available to support decision-making in the early phase of a program’s life-cycle. It also notes, however, that because not all costs and benefits can be quantified, measures other than CBA should also be considered in making business decisions. The effectiveness of CBA lies in its ability to provide increased understanding of the consequences of proposed public programs. CBA must be understood as one means to support decision-makers in making the best decisions for the public good. The value of CBA will vary with the importance of mandates, policies, and regulations. For example, CBA offers a well-established and tested approach, supported by substantial research, for identifying and assessing corporation. A CBA can enable decision-makers to make prioritized decisions about business programs. It...
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...Ubuntu Touch Cost Benefit Analysis After being tasked with finding the best phone to meet Eduboost’s various needs, it is my pleasure to present you with my findings. But before I get into this discussion on the particular phone that I have chosen, I would like to give some background on the criteria that was used to come to this decision. I considered the various needs of Eduboost, the 170 Eduboost members, the cell phone corporation I chose, as well as Eduboost’s donors, shareholders as well as the general public. I also took into consideration the savings, the future proofing, as well as the maintenance that the device would offer when we begin promoting literacy throughout the country of Melandria. With that being said, I have chosen the Ubuntu Touch as the official phone for Eduboost’s future projects. One of the factors I focused on in the beginning is how much each phone would cost. Due to the fact that our shareholders and donors have given us a set budget, I wanted to be certain that the phone we use was as practical and cost efficient as possible. According to the CNET, the Firefox OS is offered for $25 with a compatible smartphone. That is a huge difference in price when it is compared to the Ubuntu Touch, which is priced at $170 with a compatible smartphone. When factoring in the 170 Eduboost members, the total cost of Firefox OS phones would be $4,250 for the Eduboost; whereas, the total cost for Ubuntu Touch would be $11,900. Now while Firefox OS is offering their...
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...University of Phoenix | Cost Benefits Analysis | BSA310/Paula Billups | | Sharon Link Mcknight | 10/27/2014 | | Cost Benefits Analysis Evaluating quantitatively whether to follow a course of action Basic cost-benefit analysis is a moderately easy and extensively used method for determining whether to make a change. As it is named suggests using the technique simply add up the value of the benefits of a course of action, and subtract the costs associated with it. Cost are either one-off or may be continuous. Benefits are most often received over time. We create this effect of time into our analysis by calculating a payback period. This is the time it takes for the benefits of a change to repay its costs. Many businesses look for payback over a specified period, e.g. three years. In its simple form, cost-benefits analysis is carried out using only financial costs and financial benefits. For example, a simple cost/benefits analysis of a road scheme would estimate the costs of building a road, and subtract this from the economic benefits of improving transport links. It would not measure either the cost of environmental damage or the benefit of quicker and easier travel to work. A more sophisticated approach to cost/benefit measurement modes is to try to put a financial value on intangible costs and benefits. This can be highly subjective, is, for example, a historic water meadow worth $25, 000, of is it worth $500, 000 because of its environment importance...
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...Questionable cost-benefit analysis by Ford In 1968, Lee Iacocca, president of Ford Motor Co., faced fear of losing market share in subcompact auto market by German Auto, Volkswagen. Although the automobile preproduction process usually takes three and a half years, Ford made it within two years from designing phase to releasing to the market. Market seemed to be impressed by Ford, but it did not go last that long. Pinto had a critical problem that its fuel tank cannot withstand any rear-impact over 20mph speed. The fuel tank would rupture and cause fire. Moreover, Ford’s directors and their engineers already realized this issue and the potential number of people would die from fires due to Pinto’s defective design. There were remedies for Ford that they can either give up some trunk space or increase cost by putting rubber bladder for protection. However, Ford chose neither of options, rather they analyzed the cost of settlements potentially be incurred by car accidents and decided to stick with the original design as a result of profit maximization in that way. Within seven years since Pinto had been released, over 500 deaths and indeterminate numbers of injuries were caused by Pinto crashes and majority of those killed had no other injuries, meaning they burned to death. How much worth one’s life be valued in terms of dollar amount? How much is enough to pay for victim’s pain and suffering? How can you predict the number of people will die or get injured through newly introduced...
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...Cost/Benefit analysis of Employee Training programs University of Phoenix HRM/531 Training is a process that can provide significant value and rewards that far outweigh its financial costs. The effects of training touches the lives of employees from the first day of a new job through retirement The purpose of this paper is to show how employee training benefits not only the organization but also the environment as well. The reader will be introduced to an oil distribution company undergoing costly problems because of poorly trained employees. These problems have resulted in repeated environmental violations. An analysis of the company was conducted to weigh the cost/benefits of incorporating an effective employee-training program to address the problem. The outcome of the analysis will determine whether the training is financially feasible, or if another project should be pursued. In addition, the effect of management behavior on productivity, the definition and use of behavior costing, effects of high performance work policies on business financial performanceas that relate to the company; along with recommendations based on researched data gathered will be given in this paper. Training is defined as an activity leading to skilled behavior. Employee training involves a set of planned activities that organization will have their employees complete in order to increase their job knowledge, skills, and abilities. In practice, training gets employees accustomed...
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...will be a continuous highway between Vienna and Brno. The construction and maintenance of the highway is financed through Public Private Partnership by the Bonaventura Straßeneinrichtungs-GmbH Problem statement: The objective of a new highway is to improve the travel conditions and improve the quality of life for the people who are living close to the old road and suffer from noise, thus these benefits exceeds the costs of constructing and operating a highway? For answering this question an economic evaluation has to be done. Theoretical and methodological considerations An in Medias res Cost Benefit Analysis (CBA) where all relevant economic environmental and social impacts are included, is performed for the highway case. A CBA as an economic evaluation method was preferred over a Cost-Utility analysis (CUA) and Cost effectiveness analysis (CEA) because at the CUA the benefits are measured in different units for example in quality adjusted life years and at the CEA benefits are measure as a single unidimensional outcome like life years gained, whereas at the CBA all benefits and costs are monetized. Further CUA and CEA are mostly used for evaluating...
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...“Cost-Benefit Analysis” (e-Activity part I-IV) Scenario; support the reasons for recommending and accepting the financial implications of Project A over the superiors choice for Project B. After reviewing all the information in the e-Activity on the process of capital budgeting it is important to remember the stipulation of the critical acceptance level of 2.75 years and the Internal Rate of Return is set at 12% when making the decision. Project “A” Project “B” Payback Period (PP) = 1.89 years Payback Period (PP) = 3.75 years Internal Rate of Return (IRR) = 26.72% Internal Rate of Return (IRR) = 19.74% Net Present Value (NPV) = $56,922.85 Net Present Value (NPV) = $ 144,409.02 Assuming this is a mutually exclusive project, meaning that only one can be accepted make for a hard sell on accepting Project A. If these were samples of independent projects then both should be accepted because PP is unreliable and NPV is the optimum rule to follow when there is a discrepancy between the three models. In an attempt to convince the superior that Project A is the better choice for the organization I would need to point out that the payback period of less then 2 years falls well below the critical acceptance level of 2.75 years. As a BA, It would also be necessary stress the point that the IRR for project “A” calculates at nearly 27% where Project “B” has a IRR of under 20%. At his point the superior is looking at...
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...ANIMAL PROCEDURES COMMITTEE REVIEW OF COST-BENEFIT ASSESSMENT IN THE USE OF ANIMALS IN RESEARCH JUNE 2003 REPORT OF THE COST-BENEFIT WORKING GROUP OF THE ANIMAL PROCEDURES COMMITTEE PREFACE Letter to the Minister from Michael Banner, Chair of the Animal Procedures Committee 17 June 2003 Dear Ms Flint ANIMAL PROCEDURES COMMITTEE: RECOMMENDATIONS ON COST-BENEFIT ASSESSMENT UNDER THE ANIMALS (SCIENTIFIC PROCEDURES) ACT 1986 On behalf of the Animal Procedures Committee I enclose the Committee’s report on cost-benefit assessment. In it we address the adequacy of the current cost-benefit assessment performed in the course of evaluating project licence applications. We have sought to look at the many issues which arise in relation to this important element of the regulation of the use of animals, but would draw attention to three particular aspects of our work. In the first place we have addressed the fundamental question as to scientific validity of the use of animals. We believe that our considerations and conclusions offer an important clarification of the debate and fulfil the request made by your predecessor, Mike O’Brien, to provide advice on this issue. Secondly, while we conclude that some uses of animals may yield scientific knowledge, we argue that this does not settle the question of justification. We go on to elucidate the full range of factors which must be considered for there to be a rigorous application of the cost-benefit assessment. Thirdly, we also consider how...
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...Cost-benefit analysis of Trademark protection Name Course Institution Date Outline Cost-benefit analysis of Trademark protection Introduction Thesis statement: Trademark protection provides an effective platform for business activities in the marketplace though creating and developing a strong trademark that enhances production of high-quality products. A. Limitations of trademark protection 1. The use of the actual person’s name in the business can cause confusion in the business. 2. Fair use doctrine is another limitation applicable to trademark protection. 3. Import limitation. B. Advantages of trademark protection 1. Trademark reduces the search cost for the customers in the market. 2. Trademarks provide them with the incentive to produce high-quality products. 3. Trademark helps consumers identify the right product they want in the market. 4. Trademarks help the producers to reduce the cost of advertising their products. C. Analysis of the cost benefit 1. Sellers in the marketplace might have the same product that is produced with different companies; however, the goods might be similar but cannot be identical. 2. Trademark protection ensures that every consumer is protected and not overexploited by the sellers. 3. Trademark protection is based mostly on the economic cost-benefit analysis; it considers the trademark as a tool for controlling and regulating communication in the marketplace. D. Economic-based concept of explaining...
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...increased each year (Parrish, 2011). With the Individuals with Disabilities Education Act (IDEA) Griffith (2015) explained that the federal government placed additional educational requirements on school districts regarding students with disabilities. Although the federal government provides some funding for these mandated services, McCann (2014) noted that state and local taxpayers cover the remaining cost to educate students with disabilities. McCann (2014) explained that communities and local districts must provide a free and appropriate public education...
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