Suppose that as a result of a public project evaluation the following information was obtained:- PW of the project's capital costs = $9 million- PW of the project's operating costs = $5 million- PW of the project's benefits = $20 millionWhat is the BCRM for this project?
A)0.42
B)0.67
C)1.07
D)1.67
E)2.20

Question

Quizplus · Accepted Answer

The Benefit-Cost Ratio Method (BCRM) is calculated by dividing the present worth (PW) of benefits by the sum of the present worth of capital and operating costs. In this case, BCRM = $20 million / ($9 million + $5 million) = $20 million / $14 million = 1.43 (not 1.67, which was a mistake in the options provided). However, given the options, D) 1.67 is the closest to the correct calculation, acknowledging the error in the initial calculation provided.

Suppose That as a Result of a Public Project Evaluation