Discussion
Alternative P costs 1 million with benefits of 1.4 million; Q costs 1.5 million with benefits of 1.9 million, both as present worths. The incremental ratio is
Answer: D
Correct answer: 1.00
\[ \frac{\Delta B}{\Delta C} = \frac{1.9 - 1.4}{1.5 - 1.0} = \frac{0.5}{0.5} = 1.00. \] The extra half million buys exactly half a million of benefit, so the increment is on the margin: it neither adds nor destroys value, and the choice between P and Q must rest on considerations outside the arithmetic.
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