Which of the Following Is a Drawback of Cost-Benefit Analysis

question 69

Multiple Choice

Which of the following is a drawback of cost-benefit analysis?

• A) Costs and benefits that accrue over time cannot be assessed.
• B) It may be difficult to measure costs and benefits in monetary terms.
• C) The costs of an activity are usually greater than the benefits.
• D) Cost-benefit analysis can only be used to assess government interventions.

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Definitions:

Risk-adjusted Cost

A financial measure that adjusts the costs of an investment by considering the risk involved, accounting for the riskier nature of some investments compared to others.

Common Stock

A form of corporate equity ownership, a type of security representing units of ownership or equity in a corporation.

Zero-growth Perpetuity

A type of investment that pays a fixed amount of cash flows indefinitely, with no expectation of growth in the payments.

Stable Cash Flow Patterns

A financial condition where the inflows and outflows of cash are predictable and consistent over time, facilitating business planning.