FIGURE1 A cost–beneýt analysis involves weighing up the pros and cons of a decision. You are doing it every day without even realising. Can you think of any examples?
A cost–beneýt analysis helps to determine if an option will be a good decision or investment. It is also useful for comparing alternatives or projects, as well as estimating the resources needed to complete the alternative or project. A good cost–beneýt analysis: • identiýes opportunities • calculates the costs and beneýts • compares the costs and beneýts to determine if the beneýts outweigh the costs • makes a decision about the best alternative to recommend. 20.5.2 Show me Cost-beneýt analysis of saving $10 per week Costs • Reduced immediate spending power: saving $10 per week means you will have $10 less to spend on immediate needs or wants. • Opportunity cost: the money saved could have been used for other investments or to purchase goods or services that could provide immediate satisfaction or utility. Beneýts • Accumulated savings: over a year, saving $10 per week will result in a total saving of $520. • Interest earnings: if the saved amount is deposited in an interest-bearing account, it could earn additional money over time. • Financial security: having savings can provide a safety net for unexpected expenses or ýnancial emergencies. • Future investment: accumulated savings can be used to invest in opportunities that might yield higher returns. • Goal achievement: regular savings can help in achieving long-term ýnancial goals such as buying a house, funding education, or planning a vacation. Overall, given the beneýts, you may decide to save half of the allocated money per week so that you strike a balance between spending and saving. 20.5.3 Let me do it
Jacaranda Humanities Alive 8 Victorian Curriculum Third Edition
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