Discounting refers to bringing back the future value to
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values. *
cost
O present
benefit
ratio
Answers
Definition: It can be explained as a procedure for estimating all costs involved and possible profits to be derived from a business opportunity or proposal.
Description: It takes into account both quantitative and qualitative factors for analysis of the value for money for a particular project or investment opportunity. Benefits to costs ratio and other indicators are used to conduct such analyses.
The objective is to ascertain the soundness of any investment opportunity and provide a basis for making comparisons with other such proposals. All positives and negatives of the project are first quantified in monetary terms and then adjusted for their time-value to obtain correct estimates for conduct of cost-benefit analysis. Most economists also account for opportunity costs of the investment in the project to get the costs involved.
Also See: Opportunity Costs, Scarcity, Net Present Value, Earnings Before Interest, Profit After Tax