Essentials of Systems Analysis and Design (6th Edition)
Essentials of Systems Analysis and Design (6th Edition)
6th Edition
ISBN: 9780133546231
Author: Joseph Valacich, Joey George
Publisher: PEARSON
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Chapter 4, Problem 5RQ

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Methods to perform economic cost-benefit analysis:

The three most commonly used methods to perform economic cost-benefit analysis are as follows:

  • Net Present Value (NPV)
    • NPV is used to determine and compare the profit in the investment.
    • It helps to adjust the expenditures and returns, such that it can be evaluated equally over time.
    • By using this NPV, the current value of the project can be calculated, which is established by the capital cost of the company.
    • The current value of the project as well as the outlays can be determined by the discount rate.
  • Return on Investment (ROI)
    • Return on investment (ROI) is defined as the ratio of receipts of net cash of the project and the outlays cash of the project...

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