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Cost/benefit Analysis

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Cost/benefit analysis is a process of quantifying the most economically feasible outcome by weighing potential costs against potential benefits. Cost/benefit analysis is a risk management technique. Implementing cost/benefit analysis may help recognize certain risks and rewards, and thus help determine the right course of action with respect to given business undertaking. Cost/benefit analysis is an examination that can be applied to virtually any business endeavor. Stock trades, real estate deals, and business projects may all require a thorough cost/benefit analysis. An example of cost/benefit analysis would be a decision concerning an investment in a volatile but bullish stock. Large corporations and governments also perform cost/benefit analysis to streamline macroeconomic decisions related to budgeting, capital goods, monetary policy, and capacity utilization. In a professional setting cost/benefit analysis is usually conducted by business analysts or financial advisers.



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