Section 1.2 Managing Your Personal Finances 15
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the major financial decisions in your life carry lasting consequences. Given
their importance, these decisions call for systematic choices.
Cost-Benefit Analysis
Cost-benefit analysis is a method of weighing the costs against the
benefits of an action, a purchase, or a financial decision. It shows that it is in
your interest to take an action or make a purchase only if the benefits are at
least as great as the costs.
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saves you eight hours of driving time. Is the benefit of saving eight hours
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A cost-benefit analysis will help you decide to take an action only if the
benefits are worth the costs.