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How is a benefit/cost ratio computed?

Curtis Rhodes

in Homework Help

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1 answer

Deborah Edwards on March 14, 2020

Benefit-Cost Ratio (BCR) - This is the value that is obtained by dividing the benefit by the cost. The higher the value, the more attractive the project. For example, if the projected cost of production of a product is Rs.10.000, and is expected to sell for Rs.40,000, then the BCR is equal to Rs.40,000/Rs.10,000, which is equal to 4. For the benefit to exceed cost, the BCR must be greater than 1.

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