In calculating a Benefit-Cost (B-C) ratio, the analyst needs to classify certain cash flows as either added benefits or reduced costs. Which of the following statements best describes the impact on the outcome of the analysis if a particular cash flow is classified as an added benefit rather than a reduced cost? (a) The larger numerator will result in a B-C calculation that is too high. (b) The larger denominator will result in a B-C calculation that is too low. (c) There will be no impact on the acceptability of the B-C ratio. d) The B-C ratio will always be equal to 1.0.

In calculating a Benefit-Cost (B-C) ratio, the analyst needs to classify certain cash flows as either added benefits or reduced costs. Which of the following statements best describes the impact on the outcome of the analysis if a particular cash flow is classified as an added benefit rather than a reduced cost? (a) The larger numerator will result in a B-C calculation that is too high. (b) The larger denominator will result in a B-C calculation that is too low. (c) There will be no impact on the acceptability of the B-C ratio. d) The B-C ratio will always be equal to 1.0.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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