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Questions and Answers
What is a benefit-cost ratio (BCR) used for?
What is a benefit-cost ratio (BCR) used for?
- To show the relationship between the costs and benefits of a proposed project in monetary terms. (correct)
- To show the relationship between the costs and benefits of an ongoing project in monetary terms.
- To show the relationship between the costs and benefits of an ongoing project in qualitative terms.
- To show the relationship between the costs and benefits of a proposed project in qualitative terms.
What does it mean if a project has a BCR greater than 1.0?
What does it mean if a project has a BCR greater than 1.0?
- The project is expected to deliver a negative net present value.
- The project's benefits outweigh the costs.
- The project's costs outweigh the benefits.
- The project is expected to deliver a positive net present value. (correct)
What should a firm do if a project's BCR is less than 1.0?
What should a firm do if a project's BCR is less than 1.0?
- Increase the budget for the project.
- Invest in the project.
- Not consider the project. (correct)
- Consider the project.
What is the purpose of out-of-pocket costs in a project?
What is the purpose of out-of-pocket costs in a project?
What does a company expect capital to earn?
What does a company expect capital to earn?
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