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Financial Benefit-Cost Analysis

CHAPTER 5 Financial Benefit-Cost Analysis HANDBOOK FOR THE ECONOMIC Analysis OF WATER SUPPLY Operations and Residual Financial Financial Opportunity cost of capital andWeighted Average cost of the Weighted Average cost of Financial IRR and Estimation of Project Revenues (1996 Prices)..125 Table Project cost 128 Table Net Financial 130 Table Sample Calculation of Weighted Average cost of 132 Table Estimation of FIRR and FNPV (in Million VND, 1996 Prices).. 134 CHAPTER 5: Financial Benefit-Cost Analysis purpose of the Financial Benefit-Cost Analysis is to assess thefinancial viability of the proposed project, , if the proposed project is financiallyattractive or not from the entity s viewpoint. This Analysis is done for the chosen least- cost alternative which is identified following methodology described in Chapter the Financial Benefit-Cost Analysis , the unit of Analysis is the project andnot the entire economy nor the entire water utility.

5.5 Financial Opportunity Cost of Capital and ... CHAPTER 5: FINANCIAL BENEFIT-COST ANALYSIS 123 5.1 Introduction 1. The purpose of the financial benefit-cost analysis is to assess the financial viability of the proposed project, i.e., if the proposed project is financially

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