ECO 1192 Study Guide - Midterm Guide: Airborne Early Warning And Control, Opportunity Cost, Cash Flow
11 Feb 2014
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A project could be acceptable to society if the value of the goods and services exceeds the economic cost of producing them. Cash flow has higher priority over decision making. Simple and easy to calculate, readily available cash flows. Wrong decisions can be made if intangible information is missing (eg. time) Harder to explain a project selection since it may be valued differently to another person. Value of non-cash flow information will vary by decision maker: economic: measures the impact of a project"s benefits and costs on a target population"s well-being. All tangible and intangible impacts on the value of goods and services/resources mush be identified and quantified. Analysis must focus on societal impact of project. Disagreement may occur over the values of intangibles (eg. life) Topic 2: time value mechanics: valid or acceptable project: cash inflows must exceed cash outflows, projects would be equivalent if their economic effects are identical.
