While using Cost-benefit analysis which of the following is a true statement.

a) It will always produce a recommendation consistent with the simple payback period method.

b) It will always produce a recommendation consistent with the present worth, future worth, and annual worth methods.

c) It can be used only to evaluate projects from the public sector (such as bridges and roadways).

d) None of the above.

a) It will always produce a recommendation consistent with the simple payback period method.

b) It will always produce a recommendation consistent with the present worth, future worth, and annual worth methods.

c) It can be used only to evaluate projects from the public sector (such as bridges and roadways).

d) None of the above.

1 Answers

Best Answer

Each and every firm uses Cost benefit analysis in analyzing each and every project.

This analysis means that we have to find out the cost of each alternative and the benefit that we derive after implementation of every alternative.

So the alternative where benefits are more than the costs is the alternative that will be selected.

So, out of all the 4 statements, the statesmen A and B are used while analyzing Cost benefit analysis.

a) It will always produce a recommendation consistent with the simple payback period method - TRUE

b) It will always produce a recommendation consistent with the present worth, future worth, and annual worth methods - TRUE

c) It can be used only to evaluate projects from the public sector (such as bridges and roadways) - FALSE

d) None of the above. -FALSE.

So, option A and B i.e. Cost benefit analysis is consistent with Simple payback period method and is also consistent with present worth, future worth and annual worth.

Conclusion:

So, Option A and B are the statements that are true while using Cost benefit analysis.

This analysis means that we have to find out the cost of each alternative and the benefit that we derive after implementation of every alternative.

So the alternative where benefits are more than the costs is the alternative that will be selected.

So, out of all the 4 statements, the statesmen A and B are used while analyzing Cost benefit analysis.

a) It will always produce a recommendation consistent with the simple payback period method - TRUE

b) It will always produce a recommendation consistent with the present worth, future worth, and annual worth methods - TRUE

c) It can be used only to evaluate projects from the public sector (such as bridges and roadways) - FALSE

d) None of the above. -FALSE.

So, option A and B i.e. Cost benefit analysis is consistent with Simple payback period method and is also consistent with present worth, future worth and annual worth.

Conclusion:

So, Option A and B are the statements that are true while using Cost benefit analysis.