Unit 4 Case Study Assignment: Performing a Cost Benefit Analysis - Coursework Example

Cost Benefit Analysis Cost benefit analysis Cost-benefit analysis is a systematic technique that enables individuals to calculate the related costs and benefits of various items and projects towards effective decision-making. It allows purchasers and investors to execute effective comparison of items or projects by establishing their feasibility and sustainability (Brent, 2006). The information informs their decision on whether to purchase a particular item or execute a certain project. The paper gives a cost-benefit analysis of Nissan Versa car model and Nissan SUV model.

The goal of the study is to facilitate the understanding of the cost implications involved in acquiring either of the cars and their corresponding benefits to potential purchasers of the cars (Brent, 2006). The analysis that is based on diverse parameters that include but not limited to running them, cost of acquisition, maintenance cost, and insurance cost is to enable them make informed decisions. A cost-benefit analysis of the two vehicles is provided belowDetailsOption A(Nissan Versa) $Option BNissan SUV $ComparisonRetail cost11,81212,990Operating cost13.0815.92Parking553786Maintenance cost8.2110.54Insurance cost948957Depreciation cost2,4303,401License and Registration419572Ownership cost4,3505,716Total20,533.2924,448.463915.

17Benefits (tangible and intangible)Savings at the pump/ fuel consumption2015Lower insurance rates drop340210Wide economic impact750500Government assistance/tax credit21502500Lower emissions100120Transport/mileage benefits86008620Total1186011865(5)Based on the cost-benefit analysis of the two vehicles, it is clear that option A remains favorable for any potential purchaser due to the apparent benefits. This is evident based on the different amount of overhead and fixed cost involved in acquisition and running of the vehicles.

The total cost for acquiring and running vehicle A stands at $ 20,533.29 while that of option B stands at $ 24,448.46 giving a difference of $ 3915.17. Option A vehicle has lower retail cost, maintenance, operations, depreciation, insurance and registration cost as compared to option B as indicated in the table. On the other hand, the benefits of the two types of vehicles represent a difference of $ 5 in favor of option B. Option A present a slightly low benefits as compared to option B despite having reduced cost implication.

This is evident based on the mileage capacity of the vehicles given that option A has limited capacity as compared to that of option B. The advantages of option A vehicle is that it has wide economic benefits, high amount of subsidy, fuel savings and reduced insurance rates. In the review of the differences, it is advisable for a potential purchaser to consider the option A vehicle instead of option B since it presents limited cost obligation. The difference in cost that stands at $ 3915.17 means that the owner of the option A vehicle will incur limited expenditure as compared to option B vehicle owner despite the immense similarities the vehicles have.

The overriding benefits of option B cannot be matched with the cost maximization that option presents. Therefore, the cost implications should form the basis for a purchasing decision. Reference Brent, R. J. (2006). Applied cost-benefit analysis. Cheltenham, UK: Edward Elgar.