Cost Benefit Analysis Calculator

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✖The Number of Periods is the periods on an annuity using the present value, periodic payment, and periodic rate.ⓘ Number of Periods [n]			+10% -10%
✖Cash Flow of Benefits is the cash inflow for an asset or a project.ⓘ Cash Flow of Benefits [CF_B]			+10% -10%
✖Discount Rate is the interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve Bank’s discount window.ⓘ Discount Rate [DR]			+10% -10%
✖Cash Flow of Costs is the cash outflow for an asset or a project.ⓘ Cash Flow of Costs [CF_C]			+10% -10%

✖Benefit Cost Ratio is profitability indicator used in cost-benefit analysis to determine the viability of cash flows generated from a project or asset.ⓘ Cost Benefit Analysis [BCR]

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Cost Benefit Analysis Solution

STEP 0: Pre-Calculation Summary

Formula Used

Benefit Cost Ratio = (sum(x,0,Number of Periods,(Cash Flow of Benefits/(1+(0.01*Discount Rate))^x)))/(sum(x,0,Number of Periods,(Cash Flow of Costs/(1+(0.01*Discount Rate))^x)))
BCR = (sum(x,0,n,(CF_B/(1+(0.01*DR))^x)))/(sum(x,0,n,(CF_C/(1+(0.01*DR))^x)))
This formula uses 1 Functions, 5 Variables

Functions Used

sum - Summation or sigma (∑) notation is a method used to write out a long sum in a concise way., sum(i, from, to, expr)

Variables Used

Benefit Cost Ratio - Benefit Cost Ratio is profitability indicator used in cost-benefit analysis to determine the viability of cash flows generated from a project or asset.
Number of Periods - The Number of Periods is the periods on an annuity using the present value, periodic payment, and periodic rate.
Cash Flow of Benefits - Cash Flow of Benefits is the cash inflow for an asset or a project.
Discount Rate - Discount Rate is the interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve Bank’s discount window.
Cash Flow of Costs - Cash Flow of Costs is the cash outflow for an asset or a project.

STEP 1: Convert Input(s) to Base Unit

Number of Periods: 6 --> No Conversion Required
Cash Flow of Benefits: 200000 --> No Conversion Required
Discount Rate: 12 --> No Conversion Required
Cash Flow of Costs: 100000 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

BCR = (sum(x,0,n,(CF_B/(1+(0.01*DR))^x)))/(sum(x,0,n,(CF_C/(1+(0.01*DR))^x))) --> (sum(x,0,6,(200000/(1+(0.01*12))^x)))/(sum(x,0,6,(100000/(1+(0.01*12))^x)))

Evaluating ... ...

BCR = 2

STEP 3: Convert Result to Output's Unit

2 --> No Conversion Required

FINAL ANSWER

2 <-- Benefit Cost Ratio

(Calculation completed in 00.004 seconds)

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Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad

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Cost Benefit Analysis Formula

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What is Cost Benefit Analysis?

The benefit-cost ratio (BCR) is a profitability indicator used in cost-benefit analysis to determine the viability of cash flows generated from an asset or project. The BCR compares the present value of all benefits generated from a project/asset to the present value of all costs. A BCR exceeding one indicates that the asset/project is expected to generate incremental value. It is a useful starting point in determining a project’s feasibility and whether it can generate incremental value. The higher the BCR, the more attractive the risk-return profile of the project/asset.

How to Calculate Cost Benefit Analysis?

Cost Benefit Analysis calculator uses Benefit Cost Ratio = (sum(x,0,Number of Periods,(Cash Flow of Benefits/(1+(0.01*Discount Rate))^x)))/(sum(x,0,Number of Periods,(Cash Flow of Costs/(1+(0.01*Discount Rate))^x))) to calculate the Benefit Cost Ratio, The Cost Benefit Analysis determines the viability of cash flows generated from an asset or project. The BCR compares the present value of all benefits generated from a project/asset to the present value of all costs. Benefit Cost Ratio is denoted by BCR symbol.

How to calculate Cost Benefit Analysis using this online calculator? To use this online calculator for Cost Benefit Analysis, enter Number of Periods (n), Cash Flow of Benefits (CF_B), Discount Rate (DR) & Cash Flow of Costs (CF_C) and hit the calculate button. Here is how the Cost Benefit Analysis calculation can be explained with given input values -> 2 = (sum(x,0,6,(200000/(1+(0.01*12))^x)))/(sum(x,0,6,(100000/(1+(0.01*12))^x))).

FAQ

What is Cost Benefit Analysis?

The Cost Benefit Analysis determines the viability of cash flows generated from an asset or project. The BCR compares the present value of all benefits generated from a project/asset to the present value of all costs and is represented as BCR = (sum(x,0,n,(CF_B/(1+(0.01*DR))^x)))/(sum(x,0,n,(CF_C/(1+(0.01*DR))^x))) or Benefit Cost Ratio = (sum(x,0,Number of Periods,(Cash Flow of Benefits/(1+(0.01*Discount Rate))^x)))/(sum(x,0,Number of Periods,(Cash Flow of Costs/(1+(0.01*Discount Rate))^x))). The Number of Periods is the periods on an annuity using the present value, periodic payment, and periodic rate, Cash Flow of Benefits is the cash inflow for an asset or a project, Discount Rate is the interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve Bank’s discount window & Cash Flow of Costs is the cash outflow for an asset or a project.

How to calculate Cost Benefit Analysis?

The Cost Benefit Analysis determines the viability of cash flows generated from an asset or project. The BCR compares the present value of all benefits generated from a project/asset to the present value of all costs is calculated using Benefit Cost Ratio = (sum(x,0,Number of Periods,(Cash Flow of Benefits/(1+(0.01*Discount Rate))^x)))/(sum(x,0,Number of Periods,(Cash Flow of Costs/(1+(0.01*Discount Rate))^x))). To calculate Cost Benefit Analysis, you need Number of Periods (n), Cash Flow of Benefits (CF_B), Discount Rate (DR) & Cash Flow of Costs (CF_C). With our tool, you need to enter the respective value for Number of Periods, Cash Flow of Benefits, Discount Rate & Cash Flow of Costs and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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