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A project is acceptable if its benefit cost ratio is

  • A.at least zero
  • B.less than one
  • C.at least equal to the discount rate
  • D.at least one

Answer: D

Correct answer: at least one

A ratio of one means the discounted benefits net of disbenefits exactly equal the discounted costs, so the project just earns the discount rate. Above one it is worth doing; below one it is not. The discount rate is already inside the calculation, which is why the criterion is unity rather than the rate itself.

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