What term describes a financial review of various options to determine if the benefits are greater than the costs?

What term describes a financial review of various options to determine if the benefits are greater than the costs?

• A. Cost-benefit analysis
• B. Budget variance analysis
• C. ROI evaluation
• D. Payback period analysis

Answer: (A)

Evaluating whether benefits exceed costs across options is cost-benefit analysis. This approach involves identifying all relevant costs and benefits of each option, quantifying them in monetary terms where possible, and comparing the totals to determine whether the net value is positive. It may also account for the time value of money through discounting and can include intangible benefits or costs. Of the given choices, cost-benefit analysis is the best fit because it explicitly compares the overall value of options by weighing benefits against costs. Budget variance analysis is about differences between actual and planned spending, not evaluating options' value. ROI evaluation measures the return on a specific investment, and payback period analysis looks at how long it takes to recover the initial outlay; both are narrower in scope than a full cost-benefit comparison.

Evaluating whether benefits exceed costs across options is cost-benefit analysis. This approach involves identifying all relevant costs and benefits of each option, quantifying them in monetary terms where possible, and comparing the totals to determine whether the net value is positive. It may also account for the time value of money through discounting and can include intangible benefits or costs. Of the given choices, cost-benefit analysis is the best fit because it explicitly compares the overall value of options by weighing benefits against costs. Budget variance analysis is about differences between actual and planned spending, not evaluating options' value. ROI evaluation measures the return on a specific investment, and payback period analysis looks at how long it takes to recover the initial outlay; both are narrower in scope than a full cost-benefit comparison.