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Questions and Answers
Which formula is used to calculate the benefit-cost ratio using the Annual Worth (AW) method?
Which formula is used to calculate the benefit-cost ratio using the Annual Worth (AW) method?
- $A = P \cdot \frac{{(1+i)^n - 1}},{{i(1+i)^n}}$ (correct)
- $B/C = \frac{{P \cdot (1+i)^n - P}},{{i(1+i)^n}}$
- $B/C = i \cdot \frac{{(1 + i)^n}},{{(1+i)^n - 1}}$
- $A = P$
According to the benefit-cost ratio decision rule, when is a project considered economically justified?
According to the benefit-cost ratio decision rule, when is a project considered economically justified?
- When the present value of benefit is greater than the present value of cost
- When the benefit-cost ratio is greater than or equal to 1.0 (correct)
- When the benefit-cost ratio is less than 1.0
- When the present value of cost is greater than the present value of benefit
What does the benefit-cost ratio measure?
What does the benefit-cost ratio measure?
- The profitability of a project or investment
- The payback period of a project or investment
- The link between a project's cost and benefit (correct)
- The net present value of a project or investment
What is the formula for calculating the annual cost (A) in the benefit-cost ratio formula?
What is the formula for calculating the annual cost (A) in the benefit-cost ratio formula?
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What does a benefit-cost ratio of less than 1.0 indicate?
What does a benefit-cost ratio of less than 1.0 indicate?
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Which of the following best describes a cost-benefit analysis?
Which of the following best describes a cost-benefit analysis?
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What is the main purpose of conducting a cost-benefit analysis?
What is the main purpose of conducting a cost-benefit analysis?
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What are some advantages of using cost-benefit analysis?
What are some advantages of using cost-benefit analysis?
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