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Cost Benefit Analysis

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What do you mean by Cost Benefit Analysis?How does it help developing countries? Cost Benefit Ratio;Uses of Cost Benefit Analyasis;Identification of Costs & Benefits and Returns to Education.

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Cost benefit analysis is an important aspect of educational planning. This involves the enumeration, comparison and evaluation of costs and benefits. This is related to Present Discounted Value (PDV). The cost benefit ratio is the PDV of the future benefits (B) divided by the PDV of the costs (C). The cost benefit ratio (B/C) is defined as in the formula (Please check the attachment for the formula, as it contains symbols)

B/C value of 1 implies that the PDV of the benefits exactly equals the PDV of the costs. Therefore the value of B/C has to be equal to, or above 1, before the investment is worthwhile. The higher the B /C ratio, the better the investment. The interest rate utilized in calculating the B/C is very important. Typically, the lower the interest rate, the higher the B/C.

The Cost-Benefit approach to educational planning is the most scientific and useful approach. Prest and Turrey defined Cost-benefit analysis as "a practical way of assessing the desirability of projects where it is important to take a long view (in the sense of looking at ...

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