Should I spend $10,000 to install solar panels on our house? They will, apparently, last for twelve years and save us $100 per month. For the purposes of this problem, we are ignoring the "present value of money" problem.
A new parking scheme is estimated to cost 10,000 per year to implement. On average, each of 1,000 people who come to Mills will save two minutes of parking search each day, 10 minutes per week for 30 weeks of classes each year. But 200 staff members, unfortunately, will be inconvenienced by this plan: they will each end up being delayed 4 minutes per day — an 20 minutes a week for fifty weeks. If we value everyone's time at $25 per hour, calculate net benefit.
What we are looking at here is the most simple version of benefit cost analysis: deciding whether or not to undertake a single project.
For this scenario, the fundamental rule is : undertake the project is the net benefit is greater than zero.