An investment project usually lasts for many years, hence its appraisal requires a comparison of the costs and benefits over its entire life. For acceptance, the present value of the project's expected benefits should exceed the present value of its expected costs. Among a set of mutually...

In the integrated financial and economic analysis, there is a need to choose a numeraire in which all costs and benefits are expressed. The most common practice has been to express all costs and benefits in terms of domestic currency at a domestic price level. This is the natural rule to follow...

While the financial analysis of a project focuses on matters of interest to investors, bankers, public sector budgets, etc., an economic analysis deals with the impact of the project on the entire society. The primary difference between the economic and financial evaluation is that the former...

The economic cost of capital, as measured in Chapter 8, deals with the intertemporal comparisons. It links the annual flows of benefits and costs over a project's life to its initial capital investment. In the present chapter we deal with another facet of the act of raising project funds from...

For the most part, the differences between the analysis of an owner-operated private venture project and that of typical public-sector projects are concentrated in the valuation of benefits. Most project costs are indeed cash outlays, just like those of a business venture, but this is not at all...

The concept of economic opportunity cost is derived from the recognition that when resources are used for one project, opportunities to use these resources are sacrificed elsewhere. Typically when workers are hired by a project, they are giving up one set of market and non-market activities for...

The stakeholder impacts of a project can be estimated by the comparison of the financial and economic impacts of the project on the key stakeholders of a project. This analysis allows one to estimate how the income changes caused by the project that are distributed across the key groups affected...

The purpose of this chapter is to illustrate how a proposed investment in upgrading a gravel road to a tarred surface should be evaluated. The project is located in the Limpopo Province of South Africa. It involves upgrading of two existing, mainly gravel, roads into a tar surface road...

This study undertakes an integrated financial, economic and distributive appraisal of an Independent Power Producer (IPP) project to generate electricity. The critical issue is that the private sponsors of the IPP have proposed to build a single cycle electricity generation plant that is...

Non-tradable items are those which are not traded internationally. They include items such as services where the demander and producer must be in the same location, and commodities which have low value relative to either their weight or volume. In such cases the transportation charges prevent...