INTRODUCTION

Introduction Economists, engineering managers, project managers, and indeed any person involved

in decision making must be able to analyze the financial outcome of his or her decision. The

decision is based on analyzing and evaluating the activities involved in producing the outcome

of the project. These activities have either a cost or a benefit. Financial analysis gives us the

tools to perform this evaluation. Often the decision to make is to proceed or not to proceed

with a project. In cases involving investment, we want to know if the project is economically

viable in order to proceed. In effect, we compare the net benefit of proceeding with the

project against the consequences (good or bad) of not proceeding (the null alternative).