Cost-Benefit Analysis - Case Study Example

In the 1950s economists tried to offer a demanding, consistent set of approaches for measuring benefits, costs and methods deciding whether a scheme is worthy. Some methodological issues of CBA have not been entirely resolved even now, but the essentials presented in the subsequent are well proven. One of the shortcomings of CBA is that the evaluation of many components of benefits and costs is intuitively obvious but that there exist other methods for which intuition fails to suggest methods of measurement. Therefore, some important principles are needed as a guide (Pohl & Mihaljek, 1992).

Introduction
Since the enactment of the devolution agenda, Arapahoe County has been experiencing problems in personnel-based expenditures. The assessment of this County's expenditure would lead to the ease in the distribution of these given expenditures. However, inevitably would to otherwise but difficulties in the distribution of the expenditure. According to reports, the escalation rate of health is 8% but without the heath personnel in place, it is 3.5%.

In the cost-benefit computation area, the one-time costs differ in the relation to the description and the quantity. As for the HR charges set up pilot, each person gets a unit cost of 7500 and the participant's retirement is 10000 each. The recurring costs: The base stipend differs from year to year, and it is always growing from year one to year 5. As the base stipend, the ACA penalty also increases consistently from tear one to year five with its transaction year unit cost is $ 2,000 and the operational year unit cost being $3000. The recurring saving: the retirement benefit’s transition year unit saving is $ 2,664 and operational year unit saving is $ 5,327 and the development increases yearly.

The health care saving's transition year saving is $ 3,411 and the operational year unit savings is $ 6,821 and the development increases year after year. The cost /benefits adjusted for the time value of money has a discount factor growth that is decreasing yearly with the rate of 7%. The present value of costs development has a decreasing trend from year one ($ 34,502) to year five ($ 32,651). The present value of savings has an inconsistent trend of increasing and decreasing year after year. The net present value increase has a decreasing trend from year 1 to year 5 with years 3 and 4 having consistent values

In summation, it ought to be noted that the escalation rate for all categories without the health care escalation rate is 3.5% whereas the escalation rate of health care only is 8.0%. This implies that it is a health care expenditure that raises the total rate of all these expenditures. The reduction of the amount allocated for Medicare will lead to a respective reduction in the escalation rate for healthcare. Reducing the positive and negative influences of a scheme to their equivalent money value Cost-Benefit Analysis determines whether, on balance, the project is worthwhile. When all this has been considered a valuable project is one for which the discounted value of the benefits exceeds the discounted value of the costs implying that the net benefits are positive. This is similar to the benefit/cost ratio being greater than one and the internal rate of return being greater than the cost of capital (Pohl & Mihaljek, 1992). Read More