IDEAS home Printed from https://ideas.repec.org/p/qed/dpaper/196.html
   My bibliography  Save this paper

Cost-Benefit Analysis for Investment Decisions: Chapter 3 (The Financial Appraisal of Projects)

Author

Listed:
  • Glenn Jenkins

    (Queen's University, Canada and Eastern Mediterranean University, Cyprus)

  • Chun-Yan Kuo

    (Queen's University, Canada)

  • Arnold C. Harberger

    (University of California, Los Angeles, USA)

Abstract

The financial analysis of a project helps determine the financial viability and sustainability of the project. Since the integrated project analysis begins with the financial analysis and then the economic analysis, the concepts and data ought to be organized in a consequential and consistent manner. The comparison of either financial or economic benefits with their corresponding costs requires that all relevant data should be organized into a project profile covering the duration of the project's life. While a project profile is given by cash flows in the financial appraisal, the project's profile in the economic appraisal provides a flow of net economic benefits generated by the investment. This chapter explains how cash flow profiles of a project are developed and constructed in a consistent fashion. It also discusses how investment project can be evaluated from different points of view.

Suggested Citation

  • Glenn Jenkins & Chun-Yan Kuo & Arnold C. Harberger, 2011. "Cost-Benefit Analysis for Investment Decisions: Chapter 3 (The Financial Appraisal of Projects)," Development Discussion Papers 2011-03, JDI Executive Programs.
    • Handle: RePEc:qed:dpaper:196
    as

    Download full text from publisher

    File URL: https://cri-world.com/publications/qed_dp_196.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Martin Feldstein, 1983. "Inflation, Income Taxes, and the Rate of Interest: A Theoretical Analysis," NBER Chapters, in: Inflation, Tax Rules, and Capital Formation, pages 28-43, National Bureau of Economic Research, Inc.
    2. Aaron, Henry J, 1976. "Inflation and the Income Tax," American Economic Review, American Economic Association, vol. 66(2), pages 193-199, May.
    3. Glenn Jenkins, 1977. "Inflation - Its Financial Impact On Business In Canada," Development Discussion Papers 1977-04, JDI Executive Programs.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yurtsev, Arif & Jenkins, Glenn P., 2016. "Cost-effectiveness analysis of alternative water heater systems operating with unreliable water supplies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 54(C), pages 174-183.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Auerbach, Alan J, 1979. "Inflation and the Choice of Asset Life," Journal of Political Economy, University of Chicago Press, vol. 87(3), pages 621-638, June.
    2. Nowotny, Ewald, 1980. "Inflation and Taxation: Reviewing the Macroeconomic Issues," Journal of Economic Literature, American Economic Association, vol. 18(3), pages 1025-1049, September.
    3. Glenn Jenkins & G.P. SHUKLA, 1990. "Fiscal Policies For Mining (Gold) In The Pacific Islands," Development Discussion Papers 1990-03, JDI Executive Programs.
    4. Bergström, Villy & Södersten, Jan, 1979. "Inflation, Taxation and Capital Cost," Working Paper Series 19, Research Institute of Industrial Economics.
    5. David F. Bradford, 1981. "Issues in the Design of Saving and Investment Incentives," NBER Working Papers 0637, National Bureau of Economic Research, Inc.
    6. Lawrence H. Summers, 1981. "Inflation and the Valuation of Corporate Equities," NBER Working Papers 0824, National Bureau of Economic Research, Inc.
    7. Martin Feldstein, 1982. "Inflation, Capital Taxation, and Monetary Policy," NBER Chapters, in: Inflation: Causes and Effects, pages 153-168, National Bureau of Economic Research, Inc.
    8. repec:hal:spmain:info:hdl:2441/5221 is not listed on IDEAS
    9. Anari, Ali & Kolari, James, 2016. "Dynamics of interest and inflation rates," Journal of Empirical Finance, Elsevier, vol. 39(PA), pages 129-144.
    10. Stanley Fischer & Franco Modigliani, 1978. "Towards an understanding of the real effects and costs of inflation," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 114(4), pages 810-833, December.
    11. Immervoll, Herwig, 2004. "Falling up the stairs: an exploration of the effects of ‘bracket creep’ on household incomes," EUROMOD Working Papers EM3/04, EUROMOD at the Institute for Social and Economic Research.
    12. Chang Woon Nam & Doina Radulescu & Doina Maria Radulescu, 2004. "Does Debt Maturity Matter for Investment Decisions?," CESifo Working Paper Series 1124, CESifo.
    13. Adnan Abdulaziz Shahir & Francesco Figari, 2021. "The effect of fiscal drag on income distribution and work incentives: A microsimulation analysis on selected African countries," WIDER Working Paper Series wp-2021-167, World Institute for Development Economic Research (UNU-WIDER).
    14. Karl-Heinz Todter & Gerhard Ziebarth, 1999. "Price Stability versus Low Inflation in Germany: An Analysis of Costs and Benefits," NBER Chapters, in: The Costs and Benefits of Price Stability, pages 47-94, National Bureau of Economic Research, Inc.
    15. Immervoll, Herwig, 2000. "The impact of inflation on income tax and social insurance contributions in Europe," EUROMOD Working Papers EM2/00, EUROMOD at the Institute for Social and Economic Research.
    16. Bernardin Akitoby & Ariel Binder & Takuji Komatsuzaki, 2017. "Inflation and Public Debt Reversals in the G7 Countries," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 1(7), pages 5-27, May.
    17. Feldstein, Martin, 1980. "Tax Rules and the Mismanagment of Monetary Policy," American Economic Review, American Economic Association, vol. 70(2), pages 182-186, May.
    18. Karen K. Lewis & Martin D. Evans, 1992. "Do Expected Shifts in Inflation Policy Affect Real Rates?," NBER Working Papers 4134, National Bureau of Economic Research, Inc.
    19. repec:spo:wpmain:info:hdl:2441/5221 is not listed on IDEAS
    20. Chang Woon Nam & Doina Radulescu, 2003. "Effects of Tax Depreciation Rules on Firms' Investment Decisions: A Comparison of European Transition Countries," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(2), pages 52-55, 02.
    21. David W.R. Gruen, 1991. "The Effect of Steady Inflation on Interest Rates and the Real Exchange Rate in a World with Free Capital Flows," RBA Research Discussion Papers rdp9101, Reserve Bank of Australia.
    22. James R. Rhodes, 2006. "DEVOLUTION OF THE FISHER EQUATION: Rational Appreciation to Money Illusion," GRIPS Discussion Papers 08-04, National Graduate Institute for Policy Studies, revised Jun 2008.

    More about this item

    Keywords

    Economic Analysis; Financial Appraisal; Cash Flows; Inflation Impacts; Valuation of Existing Assets;
    All these keywords.

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qed:dpaper:196. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Babcock (email available below). General contact details of provider: https://edirc.repec.org/data/qedquca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.