Answer:
Cost-benefit analysis is a method used in business analysis to evaluate the potential benefits and costs of a proposed project or investment. It is a technique for weighing the expected costs against the potential benefits of a decision, in order to determine whether it is worth pursuing.
In a cost-benefit analysis, the costs of a project or investment are identified and quantified, and then compared to the expected benefits. Costs may include things like upfront investment costs, ongoing maintenance and operating expenses, and potential risks or downsides of the project. Benefits may include increased revenue, cost savings, improved efficiency, or other positive outcomes.
The analysis aims to determine the net benefit or net cost of the proposed project or investment, by subtracting the total costs from the total benefits. If the net benefit is positive, the project is considered worth pursuing. If the net cost is negative, the project may be deemed too risky or unprofitable.
Cost-benefit analysis is commonly used in industries such as finance, healthcare, construction, and government, to evaluate the potential impact of a decision on an organization's finances, resources, and objectives. It is a useful tool for decision-makers to weigh the potential benefits and costs of a project or investment, and to make informed and strategic choices.
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