5055-Week6_Lecture_CostBenefitAnalysis_Design2007 -...

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Cost/Benefit Analysis Professor Don Forrer Every decision made concerning your company will involve some advantages or benefits and some disadvantages or costs. The process for evaluating this situation is called a cost/benefit analysis. Typically a cost/benefits analysis attempts to analyze tangible and intangible costs and benefits. Tangible costs: Includes hardware, software, employee salaries, and other quantifiable costs for development and implementation. Intangible costs: Very hard to quantify but usually includes the loss of customers or a negative change in employee morale caused by problems during the implementation period. Tangible benefits: Includes positive results such as a significant costs savings or production increase resulting in successful implementation. Intangible benefits: Harder to estimate but usually includes better customer service and more accurate information resulting from successful implementation. Comparing the costs with anticipated benefits determines the viability of a project. A cost/benefit analysis is the best way to make this comparison. Cost Valuation:
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5055-Week6_Lecture_CostBenefitAnalysis_Design2007 -...

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