Which of the following best describes the role of benefit-cost analysis in the capital budgeting process by governments and not-for-profit entities?
A)It may be used to enhance the objectivity of decision-making.
B)Because all costs and all benefits can be quantified, it removes subjectivity from the decision process.
C)It eliminates the role of value judgments in the decision-making process.
D)It ensures that decisions about capital asset acquisition will be consistent with organizational goals and objectives.

Question

Quizplus · Accepted Answer

Benefit-cost analysis can provide a framework for objectively evaluating the costs and benefits of a proposed capital project. While it cannot completely eliminate subjectivity or value judgments from the decision-making process, it can help to enhance objectivity and provide a structured way to evaluate trade-offs between costs and benefits. However, it does not necessarily ensure that decisions will be consistent with organizational goals and objectives, as these goals and objectives may themselves be subject to interpretation and value judgments.

Which of the Following Best Describes the Role of Benefit-Cost