A cost benefit analysis is a systematic process for trying to measure the pros and cons of different options to determine the best path to achieving goals with the maximum return and at the minimum cost in business, trading, investing, economic transactions, and any other activity.
It is commonly used when their are multiple things to choose from to estimate the value versus the expense with each of the many possibilities.
A cost benefit analysis has two main uses.
To decide if an investment, trade, business, policy, or decision is good by contrasting whether the benefits and rewards that it produces will be greater than its cost and expenses.
It can also provide a formula for comparing multiple options for investments, trades, businesses, policies, or decisions by measuring them against each other for the total projected cost of each option with the total potential benefits to see what option has the best reward at the least cost of time, energy, money, and resources.
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