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For that project the benefit cost ratio is about

  • A.8.00
  • B.1.23
  • C.0.81
  • D.1.25

Answer: B

Dividing 250 000 of annual benefit by 203 700 of annualised cost gives 1.227. The project is acceptable at 8 per cent, though not by a wide margin, so the discount rate assumed will matter a great deal to the conclusion.

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