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Assertion: a benefit cost ratio above one is equivalent to a non-negative present worth. Reason: the ratio exceeds one exactly when discounted benefits exceed discounted costs.

  • A.both the assertion and the reason are true but the reason does not explain the assertion
  • B.the assertion is true but the reason given for it is false
  • C.the assertion is false although the reason offered is a true statement in itself
  • D.both the assertion and the reason are true and the reason explains the assertion

Answer: D

Benefits exceeding costs is the same statement as their difference being positive, so the two criteria accept and reject identically. They can still rank a set of alternatives differently, which is why increments must be examined.

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