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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
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    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.
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    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.

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    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

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