1. Define Objectives: Clearly outline the purpose of the analysis and the decision to be made. 2. Identify Costs and Benefits: List all potential costs (e.g., initial investment, operational costs) and benefits (e.g., revenue, productivity gains). 3. Quantify Costs and Benefits: Assign monetary values to all identified costs and benefits. 4. Discount Future Benefits and Costs: Use a discount rate to convert future values into present values, ensuring an accurate comparison. 5. Compare and Analyze: Calculate the net present value (NPV) by subtracting total costs from total benefits. A positive NPV indicates a potentially profitable project. 6. Make a Decision: Choose the option with the highest NPV or benefit-cost ratio.