Benefit-Cost Analysis: Financial and Economic Appraisal Using Spreadsheets

By Harry F. Campbell; Richard P. C. Brown | Go to book overview
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annuity, 18, 30
factor, 31
table(s), 31, 39, 46
@RISK© program, 201, 209–15; see also electronic spreadsheets
benefit/cost ratio (BCR),18, 20, 43; see also decision-making criteria
bond finance, 225–27
deadweight loss, 225
border vs domestic prices, 183–87
foreign exchange (FOREX) market, 184, 187
LM approach, 184, 186
LMST approach, 184
official rate of exchange (OER),183
Organisation for Economic Cooperation and Development (OECD), 184
shadow-exchange rate (SER), 183
UNIDO approach, 184, 186, 187
bottom-up approach, 251–54
case studies
International Cloth Products (ICP) project, 84–88
private and project analysis, 80–82
referent group analysis, 134–37
referent group net benefits, 138–43
report on, 308–31
shadow-pricing foreign exchange, 191–93
National Fruit Growers (NFG) project, 78–80
economic efficiency analysis, 117–20
economic impact analysis, 302–3
efficiency analysis, 113–17
incorporating distributional effects, 254–55
incorporating risk analysis, 215–19
increase in the skilled wage, 169–71
private and project analysis, 80–84
cash flows
after debt finance, 73
after tax net cash flow, 76, 77
bond rate, 78
capital cost, 72
debt finance flow, 73
depreciation, 69, 77
discounted cash flow (DCF), 36
double-counting depreciation, 70
equity, 72–76
equity capital, 78
financing flows, 72, 73
fixed investment, 69
incremental, 67–71
interest, 77
interest charges, 72
own funds, 73
private appraisal, 73
real domestic bond rate, 78
straight-line method of depreciation, 70
taxable profits, 77
taxation, 37, 62–64, 76–77
with and without, 67
working capital, 69
see also private benefit-cost analysis
c.i.f. price, 172; see also traded and non-traded commodities
compensating variation, 171–73
consumer surplus, 171
Marshallian demand curve, 172
normal good, 172
utility-constant demand curve, 172
see also Kaldor–Hicks criterion
constant prices, 33
consumer surplus, 3, 146, 148–52, 171–73, 262, 273–76
complementary goods, 146
non-market valuation, environmental goods, 273–76
non-tradeable goods, 146
price changes, 146
real and pecuniary effects, 147
small project assumption, 146
substitute products, 146
world prices, 146
contingent valuation method (CVM), 280–82; see also nonmarket valuation
corrective taxation, 111–12
ad valorem tax, 111
carbon tax, 112
externality, 111
gross of tax, 111
indirect tax, 111
cost-effectiveness analysis (CEA), 272; see also threshold analysis
deadweight loss, 225; see also bond finance, tax increase on labour income
decision-making criteria, 41–53
accept or reject decisions, 43
annual equivalent cost, 53
benefit-cost ratio (BCR), 41, 43
capital rationing, 50
changing the discount rate, 42
choosing or ranking alternatives, 43
indivisible projects, 51
internal rate of return (IRR), 41, 45–48
lumpiness, 51
net benefit investment ratio (NBIR), 50
net present value (NPV), 41, 49–53
profitability ratios, 50
projects with different lives, 51
decision-support tool, 304; see also report writing
deliberative value assessment (DVA), 283
citizens' juries (CJ), 283
multi-criteria analysis (MCA), 283;
see also non-market valuation
depreciation, 67–71, 77
accounting, 32
double-counting, 70
economic, 32
straight-line method, 70; see also cash flows
diminishing marginal productivity of capital, 23
discount factor, 18, 20
discount rate, 4, 18, 20, 77, 112–13
bond rate, 113
choice of discount rate, 112
nominal, 65
risk factor, 34
time value of money, 37, 38
value of information, 211
see also social rate of discount
discrete choice modeling (DCM), 282–83; see also non-market valuation
distributional weights, 253–54


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