Cost Benefit Analysis refers to a formal method that is used to help estimate or evaluate the project request for a project or proposal. This issue is itself an estimate of project and an informal approach to make a decision, whatever it is. Both definitions imply, explicitly or not, weighing the total expected costs against the total expected benefits of one or more actions to determine what action is the best or most profitable. This tool is known by the abbreviation ACB, CBA. Close to the CBA, but slightly different, formal techniques include a value analysis and measuring profitability benefits.
The process involves the calculation of initial and ongoing costs relative to expected return. It is often very difficult to construct plausible measures of costs and benefits of specific actions. In practice, analysts try to estimate the costs and benefits or by making a study, either by drawing interference with market developments. For example, a product manager may compare manufacturing costs and marketing to sales projections of a given product and make the decision only if it hopes to produce a profit that will be enough to intersect the costs ultimately. The cost-benefit analysis attempts to bring the costs and benefits on the same level. We choose a discount rate, which is then used to estimate all costs and future income related to the current value. The discount rate used for present value calculations is simply an interest rate caught financial markets.