CE Board Exam Randomizer

A benefit-cost ratio greater than 1.0 usually indicates an economically acceptable investment.

$$BCR=\frac{\text{Present worth of benefits}}{\text{Present worth of costs}}$$

If the benefit-cost ratio is 1.8, how much should be spent on a project that provides annual benefits of P120,000 for 5 years at 12%?

$$PW\ of\ benefits=120000(P/A,12\%,5)=432,573$$

$$Cost=\frac{432,573}{1.8}=240,318$$

Final answer: P240,318.

A small entrepreneur invests P80,000 and expects gross income P25,000 with operating cost P6,000 annually for 10 years at 12%. Compute BCR.

$$A=25,000-6,000=19,000$$

$$PW=19000(P/A,12\%,10)=107,354.24$$

$$BCR=\frac{107,354.24}{80,000}=1.34$$

Final answer: 1.34.

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