Which statement about the selection of mutually exclusive projects using the benefit-cost ratio method is true?
A)The benefit-cost ratio selects the project with the lowest ratio.
B)The benefit-cost ratio may rank projects differently from the net present value method.
C)The benefit-cost ratio may select a project,even though it may have a negative net present value.
D)The benefit-cost ratio will not select a project with a ratio greater than 1.

Question

Quizplus · Accepted Answer

The benefit-cost ratio (BCR) and the net present value (NPV) method can indeed rank projects differently because they measure project viability in different ways. The BCR compares the benefits of a project to its costs, providing a ratio that can be used to compare projects, while NPV calculates the present value of net cash flows over the life of the project. Different projects might have varying cash flow timings, sizes, and project scales, leading to different rankings by these two methods.

Which Statement About the Selection of Mutually Exclusive Projects Using