Using the benefit-cost ratio the decision rule is to accept projects with a benefit-cost ratio:
A)equal to 1.
B)less than 1.
C)greater than the opportunity cost.
D)greater than 1.

Question

Quizplus · Accepted Answer

The benefit-cost ratio measures the ratio of the total present value of benefits to the total present value of costs for a project. A benefit-cost ratio greater than 1 indicates that benefits outweigh costs, while a ratio of less than 1 indicates the reverse. Therefore, projects with a benefit-cost ratio greater than 1 should be accepted.

Using the Benefit-Cost Ratio the Decision Rule Is to Accept