Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

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Table 4.66 Economic analysis (thousands of Euros)CF 1 2 3 4 5 6 7 8 9 10Product A 1.000 0 1,200 1,800 3,060 4,766 4,934 5,108 5,287 5,473 5,665Product B 1.000 0 750 1,050 1,680 2,206 2,272 2,341 2,412 2,485 2,534Product C 1.000 0 2,400 3,840 6,912 20,798 27,119 27,744 28,384 29,038 29,708SALES 0 4,350 6,690 11,652 27,770 34,325 35,193 36,083 36,996 37,907Raw materials 0.950 0 2,108 3,241 5,646 13,455 16,631 17,051 17,482 17,925 18,366Labour 0.600 0 177 492 851 861 871 881 892 902 913Electricity 0.970 0 173 273 486 1,185 1,499 1,570 1,645 1,723 1,801Fuel 0.970 0 224 364 666 1,670 2,164 2,321 2,485 2,656 2,831Maintenance 1.000 0 131 201 350 833 1,030 1,056 1,082 1,110 1,137General industrial costs 1.000 0 124 181 297 666 772 739 704 666 625Administrative costs 1.000 0 126 187 315 722 858 845 830 814 796Sales expenditure 1.000 0 114 173 297 647 781 802 823 844 865TOTAL OPERATING COSTS 0 3,177 5,112 8,908 20,040 24,606 25,266 25,943 26,640 27,335RETIREMENT BONUS 1,000 0 0 0 0 0 0 0 0 0 0Land 1,235 3,705 0 0 0 0 0 0 0 0 0Buildings 0.715 4,290 4,290 3,575 0 0 0 0 0 0 0New Equipment 0.990 9,900 13,860 17,820 0 0 0 0 0 0 0Used Equipment 0,990 0 0 0 0 0 0 0 0 0 0Extraordinary Maintenance 0,756 0 0 0 0 0 0 0 0 0 0Fixed Assets 17,895 18,150 21,395 0 0 0 0 0 0 0Licenses 1.000 0 0 500 0 0 0 0 0 0 0Patents 1.000 0 0 500 0 0 0 0 0 0 0Other pre-prod. expenses 1.000 0 0 0 0 0 0 0 0 0 0Pre-production expenditure 0 0 1,000 0 0 0 0 0 0 0Investments costs 17,895 18,150 22,395 0 0 0 0 0 0 0Cash 1.000 50 125 90 90 90 90 90 90 90 90Client 1.000 110 460 600 600 600 600 600 600 600 600Stock 1.000 1,400 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000Current Liabilities 1.000 1,060 1,185 1,190 1,190 1,190 1,190 1,190 1,190 1,190 1,190NET WORKING CAPITAL 500 1,400 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500Variations in working capital 500 900 100 0 0 0 0 0 0 0Repl. of short-life equipment 0.756 0 0 0 0 0 181 318 408 224 392Residual value 0.928 0 0 0 0 0 0 0 0 0 -25,984Other investment items 0 0 0 0 0 181 318 408 224 -25,984TOTAL INVESTMENT COSTS 18,395 19,050 22,495 0 0 181 318 408 224 -25,424TOTAL EXPENDITURE 18,395 22,227 27,607 8,908 20,040 24,787 25,584 26,351 26,864 1,911NEGATIVE EXTERNALITIES 0 18 27 47 102 124 127 129 132 135TOTAL ECONOMICEXPENDITURES18,395 22,245 27,634 8,955 20,142 24,911 25,710 26,480 26,996 1,878NET ECONOMIC FLOW -18,395 -17,895 -20,944 2,697 7,629 9,414 9,483 9,603 10,000 36,029Discount Rate 5.5%ENPV 3,537.5ERR 6.7%B/C 1.02198
ANNEXES199
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ACRONYMS AND ABBREVIATIONSBAUB/CCBA
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TABLESTable 2.1 Financial analysis
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FIGURESFigure 1.1 Project cost spre
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Cohesion Fund, and through the leve
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or the plant will not reveal excess
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CHAPTER ONEPROJECT APPRAISAL IN THE
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Some specifications for financial t
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FOCUS: INFORMATION REQUIREDGeneral
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In particular, CBA results should p
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CHAPTER TWOAN AGENDA FOR THE PROJEC
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objectives, are, as far as possible
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considered the appropriate shadow p
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2.3.2 Feasibility analysisFeasibili
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This approach will be presented in
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Current assets include:- receivable
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The following items are usually not
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Mainly, the examiner uses the FRR(C
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The dynamics of the incoming flows
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eturn on their own capital (Kp). Th
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While the approach presented in thi
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2.5.1 Conversion of market to accou
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Table 2.9 Electricity price dispers
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2.5.1.2 Fiscal correctionsSome item
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previously estimated in projects wi
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FOCUS: ENPV VS. FNPVThe difference
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2.6 Risk assessmentProject appraisa
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Table 2.14 Impact analysis of criti
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Figure 2.6 Probability distribution
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eneficiary. The project proposer sh
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There are many ways to design an MC
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PROJECT APPRAISAL CHECK-LISTCONTEXT
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- reduction of congestion by elimin
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- the methods applied to estimate e
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- the marginal external costs: cong
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- the benefits for the existing tra
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The following tables show some refe
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3.1.1.6 Risk assessmentDue to their
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As shown in Figure 3.1, only under
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3.1.3.7 Other project evaluation ap
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- Waste Management Hierarchy rules
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The time horizon for a project anal
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every user support the total costs
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Territorial reference frameworkIf t
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Cycle and phases of the projectGrea
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One of the most important aims of t
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projects, as in other sectors in wh
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3.2.3.2 Project identificationBasic
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In order to evaluate the overall im
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for regassification plants, number
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Examples of objectives are:- change
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decontamination if any;- the techni
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3.3.3.6 Risk AnalysisCritical facto
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3.3.4.6 Risk assessmentCritical fac
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3.4.1.5 Economic analysisThe follow
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Financial inflows• Admission fees
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expectancy suitably adjusted by the
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The time horizon for project analys
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A Cost-Benefit Analysis should cons
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CHAPTER FOURCASE STUDIESOverviewThi
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- finally, there is the traffic tha
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c) Road users producer’s surplus:
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4.1.5 Scenario analysisTwo scenario
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The financial performance indicator
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Table 4.10 Economic analysis (Milli
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Table 4.12 Financial return on capi
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4.2 Case Study: investment in a rai
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4.2.4 Economic analysisThe benefits
Page 148 and 149: Financial investment costs have bee
Page 150 and 151: Figure 4.6 Results of the risk anal
Page 152 and 153: Table 4.22 Economic analysis (Milli
Page 154 and 155: Table 4.24 Financial return on capi
Page 156 and 157: 4.3 Case Study: investment in an in
Page 158 and 159: ate of 0.6% per year is assumed for
Page 160 and 161: The shadow price of the CO 2 avoide
Page 162 and 163: As a result, the probability distri
Page 164 and 165: Table 4.36 Financial return on capi
Page 166 and 167: 16 17 18 19 20 21 22 23 24 25 26 27
Page 168 and 169: 4.4 Case Study: investment in a was
Page 170 and 171: 4.4.2 Financial analysisAlthough in
Page 172 and 173: THE CALCULATION OF REVENUESReferrin
Page 174 and 175: 0.15 m 3 /m 2 a depreciation of 20%
Page 176 and 177: As result, the probability distribu
Page 178 and 179: Figure 4.13 Probability distributio
Page 180 and 181: Table 4.48 Financial return on nati
Page 182 and 183: Table 4.50 Financial return on priv
Page 184 and 185: 16 17 18 19 20 21 22 23 24 25 26 27
Page 186 and 187: 4.5 Case Study: industrial investme
Page 188 and 189: 4.5.4.1 Investment costsThe total i
Page 190 and 191: Finally, a residual value was estim
Page 192 and 193: This analysis shows the need to pay
Page 194 and 195: Table 4.62 Financial return on inve
Page 196 and 197: Table 4.64 Return on private equity
Page 200 and 201: ANNEX ADEMAND ANALYSISDemand foreca
Page 202 and 203: The method applied for the forecast
Page 204 and 205: Furthermore, travel demand depends
Page 206 and 207: This Guide supports a unique refere
Page 208 and 209: A higher discount rate for countrie
Page 210 and 211: Figure C.1 Project ranking by NPV v
Page 212 and 213: The main problems with this indicat
Page 214 and 215: EXAMPLE OF SHADOW WAGE IN DUAL MARK
Page 216 and 217: Another exhaustive way to include d
Page 218 and 219: Figure E.2 Percentage of low income
Page 220 and 221: ANNEX FEVALUATION OF HEALTH &ENVIRO
Page 222 and 223: Figure F.1 Main evaluation methodsS
Page 224 and 225: - expenditure on capital equipment
Page 226 and 227: due to air pollution or water conta
Page 228 and 229: BENEFIT TRANSFER - SELECTED REFEREN
Page 230 and 231: ANNEX GEVALUATION OF PPP PROJECTSIt
Page 232 and 233: adjustments for Competitive Neutral
Page 234 and 235: ANNEX HRISK ASSESSMENTIn ex-ante pr
Page 236 and 237: Reference ForecastingThe question o
Page 238 and 239: Figure H.5 Levels of risks in diffe
Page 240 and 241: ANNEX IDETERMINATION OF THE EU GRAN
Page 242 and 243: A.4. Technological Alternatives and
Page 244 and 245: GLOSSARYAccounting period: the inte
Page 246 and 247: Market price: the price at which a
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BIBLIOGRAPHY1. ReferencesBelli, P.,
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Ray, A. 1984, Cost-benefit analysis
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EnvironmentGeneralAtkinson, G., 200
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European Commission, DG Tren, 2003,
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Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

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