Please use this identifier to cite or link to this item: http://hdl.handle.net/1946/26878
Making critical financial decisions can be a heavy burden for any executive, especially when the decision involves many alternative investment opportunities each seeming to be acceptable. To be able to choose between these investments options, the body responsible has the possibility of analysing each proposed investment. The analytical process includes measuring the contextual connection with the organization, establishing the appropriateness of the investment and present the KPI available for monetary measurements. The cost-benefit analysis method is a helpful tool for analysing and comparing different projects. The method adds monetary values on benefits and costs which in turn allows for a detailed profitability and cash flow analysis.
The thesis includes a literature review of the best practices available, these methods were applied on a current business case under consideration at Isavia. Isvaia which is the operating body responsible for the oversight and daily operation of Keflavik airport is Isavia. The organization has a vast amount of different division each accountable for their particular daily task. The main objective of this thesis was to apply the current best practices of CBA on a business case involving a new terminal lounge at Keflavik airport. The lounge is defined as a secluded area in the terminal building where passenger’s area able to pay an entrance fee to enjoy additional services.
The results show that the lounge project has solid operational environment and by applying the current methodology during the conception phase of the project the organization has no reason not going ahead with the project. The internal rate of return and the Net present value of the investment which area the KPI of the project show a positive return on investment and the sensitivity of various cost and revenue factors are within acceptable limits.
Keywords: Cost-benefit analysis, Business case, Isavia, Internal rate of return, Net present value, Sensitivity analysis.
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Note: MSc verkefni