Case #2: Cost / Benefit Analysis (28 marks) Most companies do look for ways to make their investment returns positive. For this reason, they do try as much as they can to minimize their risks by conducting an exhaustive Cost Benefit Analysis (CBA). However, while some find this technique a long and tedious process, other individuals/companies simply don't know where to start. a) a) What is a cost/benefit analysis (CBA)? b) b Is this technique suitable for the small business owner? c) A plastic Toys Plant is expected to require an initial investment of $500,000 and annual maintenance expensive of $80,000. The benefits to the owner are valued at $100,000 per year. This project can be assumed to have an expected life of 10 years. If the opportunity cost or the minimum attractive rate of return (MARR) is 10% per year, determine whether the project is economically attractive? Answers