Question

Which costs are excluded from the cost-benefit analysis?

Answer 1

Answer:

Irrecoverable cash outlays that occurred prior to the evaluation of the project are excluded, only the present and future costs/benefits are assessed. You cannot go back in time to add in past costs, only deal in the current and the future, as best you can.

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Answer 2

Answer:

Irrecoverable cash outlays incurred prior to the project's evaluation are not included in the cost benefit analysis.

Explanation:

• Cost-benefit analysis, in general, entails adding up all of a project's or decision's costs and subtracting that number from the project's or decision's which are total predicted benefits.
• For instance, the cost of developing a new product is $100,000, with 100,000 units expected to be sold (unit price = 2).
• As a result, 200,000 benefits will be sold for the above example.
• For this project, the simple formula for CBA is 200,000(in monetary benefit) minus 100,000 (in costs)= 100,000 (in net benefit) .

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