Figure 3. Sample cost benefit analysis.
| Interest rate | 10% | |||||
| Annual Est. Benefit | 1,000 | |||||
| Year | 0 | 1 | 2 | 3 | 4 | 5 |
| Benefits | $0.00 | $1,000.00 | $1,000.00 | $1,000.00 | $1,000.00 | $1,000.00 |
| Present value factor | 100.0% | 90.9% | 82.6% | 75.1% | 68.3% | 62.1% |
| PV of benefit | $0.00 | $909.99 | $826.45 | $751.31 | $683.01 | $620.92 |
| PV sum of all benefits | $3,790.79 | |||||
| Cost | $2,000.00 | $0.00 | $0.00 | $1,000.00 | $0.00 | $0.00 |
| Present value factor | 100.0% | 90.9% | 82.6% | 75.1% | 68.3% | 62.1% |
| PV of cost | $2,000.00 | $0.00 | $0.00 | $751.31 | $0.00 | $0.00 |
| PV sum of all costs | $2,751.31 | |||||
| Net Present Value | $3,790.79 - $2,751.31 = $1,039.48 | Usually only one comparison value is reported. All three are shown here because this is an example calculation. | ||||
| Benefit Cost Ratio | $3,790.79 / $2,751.31 = 1.4 | |||||
| IRR | 29.5% | |||||