What does it mean when a cost-benefit analysis shows a positive net benefit?
A positive net benefit indicates that the benefits of a project or decision outweigh the costs, suggesting it's a good investment.
How do I calculate the net present value (NPV) in a cost-benefit analysis?
To calculate NPV, subtract the present value of costs from the present value of benefits. Use a discount rate to account for time.
What factors should I consider when interpreting these results?
Consider the accuracy of your data, the time frame of the analysis, and any external factors that could influence costs or benefits.
Can you give an example of a cost-benefit analysis?
Sure! For instance, a city might analyze the costs and benefits of building a new park, weighing construction costs against increased property values and community health benefits.
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