Discussion
A project has annual benefits of 500 000, annual disbenefits of 50 000 and annual costs of 300 000. Its conventional benefit cost ratio is
Answer: C
Benefits less disbenefits gives 450 000, and dividing by the 300 000 of agency cost gives 1.50. The project is acceptable, the ratio comfortably exceeding unity, which is the same conclusion a positive present worth would give.
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