Cost Benefit Analysis
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Peter Cullen BurberyCost Benefit Analysis
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Peter Cullen BurberyfromPtoA is a program function for TI-Nspire CX CAS calculator. The formula is based on this function.
n
P∗( i−1 ) i
FromPresentToAnnualPayment [ P , i, n ] ≔
i n −1
FromPresentToAnnualPayment is a Wolfram Language function for Mathematica. TI-Nspire CX CAs has a
limit on the name of the function/the length/how many characters so I shortened it to fromptoa from
FromPresentToAnnualPayment.
Example 5
Symbol Explanation
B Advantages to the public
D Disadvantages to the public
C Costs by the government
All values are in k. so 320 means 320k/320 000.
Alternative X Y
First cost, $ 320 540
M&O costs, $/year 45 35
Benefits, $/year 110 150
Disbenefits, $/year 20 45
Life, years 10 20
Solution. First, calculate equivalent total cost
Alternative X Y
Annual fromPtoA(320,1.1,10) fromPtoA(540,1.1,20)
Annual value approximate 52.078 63.428
Annual value+M&O fromPtoA(320,1.1,10)+45 fromPtoA(540,1.1,20)+35
Annual value+M&O 97.078 98.428
Do blank vs DN analysis by computing (B-D)/C.
Alternative X Y
BC ratio (110-20)/ (150-45)/
( fromPtoA(320,1.1,10)+45) (fromPtoA(540,1.1,20)+35)
BC ratio computed (110-20)/ 97.078 (150-45)/ 98.428
BC 0.927 1.066
Analysis 0.927<1 1.066>1
Conclusion Not economically feasible, Economically feasible, choose
eliminate X select pick Y
Delta calculations
Alternative Beginning Benefits B Disbenefits D
Y value (fromPtoA(540,1.1,20)+35) 150 45
X value (fromPtoA(320,1.1,10)+45) 110 20
Delta Y-X (fromPtoA(540,1.1,20)+35)- 150-110 45-20
(fromPtoA(320,1.1,10)+45)
Value 1.349 40 25
Calculation
Value Calculation
BC ratio (40-25)/( (fromPtoA(540,1.1,20)+35)-
(fromPtoA(320,1.1,10)+45))
BC ratio computed (40-25)/1.349
BC 11.113
Analysis 11.113>1
Conclusion Choose pick select Y over instead of X.
