Determining Economic Feasibility: Four Cost / Benefit Analysis Methods

Abstract Most organizations have more investment alternatives than resources to invest. Therefore, they hope that the benefits of the system they choose to invest in will be greater than the alternative systems they rejected. An accurate cost/benefit analysis must take into account the time value of money, the risks inherent in the development of a new system, and the costs and benefits of a system throughout its life cycle. This article describes four approaches to comparing the costs and benefits of a proposed system.