Cost-Benefit Ratio

Correct Answer: The project's cost is higher than its benefits

A project with a Cost-Benefit Ratio less than 1 indicates that the project's cost is higher than its benefits. This is because the cost-benefit ratio is calculated by dividing the benefits of a project by its costs. A result less than 1 means the costs are more than the benefits. Answer 153691 is incorrect because the project's benefits are not higher than the cost. Answer 153692 is partially correct but doesn't fully capture the meaning of a cost-benefit ratio less than 1 - while it might suggest project is not viable, it's possible to still continue with a high cost project if the benefits, while less in monetary terms, still meet strategic or mandatory objectives. Answer 153693 is incorrect because a cost-benefit ratio of 1 means the project's cost equals to its benefits, not less.

Correct Answer: 0.6

To calculate the new cost-benefit ratio, we need to find the new total cost and then divide the estimated benefits by the new total cost. Given: - Initial projected cost: $500,000 - Estimated benefits: $1,000,000 - Additional cost incurred: $100,000 Step 1: Calculate the new total cost New total cost = Initial projected cost + Additional cost incurred New total cost = $500,000 + $100,000 = $600,000 Step 2: Calculate the new cost-benefit ratio New cost-benefit ratio = Estimated benefits / New total cost New cost-benefit ratio = $1,000,000 / $600,000 = 1.67 To convert the ratio to the options given, we need to divide 1 by 1.67. 1 / 1.67 = 0.6 (rounded to the nearest option) Therefore, the new cost-benefit ratio is 0.6.

Correct Answer: 2.5:1

The cost-benefit ratio is calculated by dividing the costs by the benefits. In this case, the new costs are $1,200,000 and the benefits remain $3,000,000. When you divide $1,200,000 by $3,000,000 you get 0.4. Therefore the new cost-benefit ratio is inverted to be 2.5:1. The answer '2.5:1' is the correct one, as the ratio has correctly accounted for the increased costs. The other answers are incorrect because they either don't reflect the revised costs ('3:1' and '2:1') or misrepresent the ratio ('1.2:1').