CBA is an integral part of the individual, corporate and government decision making process. By evaluating the costs and benefits of a decision, one can determine whether the investment is viable or whether to opt for an alternative investment.
Purpose of cost benefit analysis (CBA)
● First, CBA determines if an investment business case is sound by comparing costs and returns. For a feasible project, benefits must outweigh costs.
● Secondly, CBA offers a baseline for comparing proposed projects with alternative options by evaluating which project generates greatest benefits for a given level of investment.