COST-BENEFIT ANALYSIS FOR INVESTMENT DECISIONS,

Question 1

Every project has

Answer 1

certain phases in its development and implementation

Question 2

First phase

Answer 2

First, the administrative feasibility of the project
implementation must be fairly assessed and the marketing and technical appraisals of the
the project must be provided to evaluate its feasibility

Question 3

Second phase

Answer 3

Second, the financial capability of the

project to survive the planned duration of its life must be appraised

Question 4

Third phase

Answer 4

Third, the expected economic contribution to the growth of the economy must be measured based on the principles of applied welfare economics and a series of assumptions used to undertake this
appraisal

Question 5

Finally

Answer 5

Finally, an assessment must also be made to determine if, and how, this project assists in attaining the socio-economic objectives set out for the country

Question 6

three independent outcomes

Answer 6

financial (or budgetary), economic, and distributional (or stakeholder) impacts of a project or program as three independent outcomes

Question 7

The economic, financial, and stakeholder analysis of a project should also be closely linked because

Answer 7

The information obtained at one stage of the appraisal may be essential for the completion of another aspect of the evaluation.

Question 8

A preliminary analysis of a public sector project that looks at financial variables alone is not very meaningful, no matter how accurately it has been carried out

Answer 8

The appraisal will be of more value to the public sector decision-makers if the analytical effort is spread out over all the important aspects of the project to derive its impact on the net economic well-being to
society as a whole

Question 9

Stages in project appraisal

Answer 9

Idea, Prefeasibility, Feasibility, detailed design, inception

Question 10

idea

Answer 10

The first and most important task of every procedure for project evaluation is to ensure that the prospective benefits of a project exceed its prospective costs. This is by no means a simple and straightforward task

Question 11

pre-feasibility

Answer 11

The pre-feasibility study is the first attempt to examine the overall potential of a project.

Question 12

pre-feasibility order of magnitude

Answer 12

whether the project is attractive enough to warrant more detailed design work?.

Question 13

In order to avoid the acceptance of projects based on overly optimistic estimates of benefits and costs, the pre-feasibility analysis should

Answer 13

use estimates with a downward bias for benefits and an upward bias for costs.

Question 14

pre-feasibility

Answer 14

Demand module
Technical or Engineering module
Manpower and administrative support module 
Financial/Budget module
Economic module
Environmental Assessment module
Stakeholder module

Question 15

Demand module

Answer 15

in which the demand for the goods and services, and prices, or the relative needs of social services are estimated, quantified, and justified.

Question 16

Technical or Engineering module

Answer 16

in which the input parameters of the projects are specified in detail and cost estimates developed

Question 17

Manpower and administrative support module

Answer 17

in which manpower requirements are
specified for the implementation as well as for the operation of the project and
sources of manpower identified and quantified

Question 18

Financial/Budget module

Answer 18

in which the financial expenditures and revenues are evaluated along with an assessment of the alternative methods of financing.

Question 19

Economic module

Answer 19

in which the project’s economic costs and benefits as a whole are appraised from the viewpoint of the economy.

Question 20

Environmental Assessment module

Answer 20

Environmental Assessment module in which the various environmental impacts of the project are identified, evaluated and proposals developed for their mitigation.

Question 21

Stakeholder module

Answer 21

Stakeholder module in which the project is appraised from the point of view of who receives the benefits and who pays the costs of a project. Where possible, quantification should be made to determine by how much each of these groups benefits or pays.

Question 22

Secondary research

Answer 22

Utilization of the previous research

Question 23

project Cycle

Answer 23

is important

Question 24

Need, wants, and demand

Answer 24

n short, needs are things that satisfy the basic requirement. Wants are requests directed to specific types of items. Demands are requests for specific products that the buyer is willing to and able to pay for. In a consumer, market examples are usually very clear to identify.

Question 25

CEA and CBA

Answer 25

Cost‐effectiveness analysis is a technique that relates the costs of a program to its key outcomes or benefits. Cost-benefit analysis takes that process one step further, attempting to compare costs with the dollar value of all (or most) of a program’s many benefits.

Question 26

CEA and CBA2

Answer 26

calculates the monetary ratio of all costs to all benefits of a program