Cost Benefit Analysis Templates
Cost Benefit Analysis, usually known as CBA is used widely in almost all sectors. The analysis can be done by a group or by an individual both for business or personal investment. Generally, people invest to get higher returns in future. But there is always a cost involved in the investment. Thus, your return must be greater than the cost or the expenditure incurred to get sustainable profits. For this purpose, one must do Cost Benefit Analysis prior to the investment.
There are financial experts who deal in the same field but they do in depth analysis using proper methods and calculations. They are hired by big businessmen who invest in huge figures. But if you wish to do an analysis for your investment, you can follow the guidelines mentioned below. This will certainly help in reducing risk and thus leading to higher returns.
Cost Benefit Analysis Format
Cost Benefit Analysis is a systematic approach used for comparing various investments. Thus, to know whether you are investing in the right project, it is important to consider the same and also whether you will get a good ROI.
The Cost Benefit Analysis is done in monetary terms usually known as time value of money. It is a method to do the analysis and is calculated to get the Net Present Value (NPV). This method is little complex but if a Finance expert is consulted your work can be easily done.
Apart from this, a general analysis can be done which also contributes to Cost Benefit Analysis. This includes risk analysis, cost-effective analysis, economic impact analysis, etc. But they can only help in giving a general estimate of the analysis. Thus, it is advised not to completely rely on those. A better approach is to follow the process of Cost Benefit Analysis as mentioned below.
Using Cost Benefit Analysis Templates
List down all the investment projects where you wish to invest. Do not forget to mention the alternatives along with the projects on the hit list. Choose a scale to measure the elements which contribute significantly (cost wise). Consider a time period (say 5 years or so) and estimate, or forecast the cost and the returns. Ensure that the cost of all the components is mentioned in the same unit and currency. This is done to make the calculations easier. Also, it gives a better understanding when the same units are compared with each other. Next, calculate the Net Present Value by using an appropriate discount rate.
Lastly, do a sensitivity analysis. In this step, you are to check for the returns if costs and expenditures are altered along with the varying discount rate. Once, you are done with this, choose the best option that gives more benefits and returns, keeping the cost factor same.
Free Cost Benefit Analysis Templates
The Cost Benefit Analysis considers the users involved, non-users, social benefits or impact of the investment and any other external effects as well as related factors. Thus, if the above steps are followed, you can easily choose the best investment option to get higher returns.
Here are previews and download links for these Cost Benefit Analysis Templates.
