In evaluating three mutually exclusive alternatives by the B/C method, the alternatives were ranked A, B, and C, respectively, in terms of increasing cost, and the following results were obtained for overall B/C ratios: 1.1, 0.9, and 1.3. On the basis of these results, it is correct to: (choose one)

Select only alternative C

Compare A and C incrementally

Select only alternative A

Select alternatives A and C

I AM CONFUSED WITH TWO OPTIONS PLEASE PROVIDE ME WITH THE BEST ONE

On the basis of these results, it is correct to select only alternative C. This is because in alternativesthat aremutually exclusive, we selectonly one

alternative as only one alternative is needed. Using the B/C method to sect a

project requires that the project with the highest Benefits to cost ratio is

selected. Project C has the highest B/C ratio of 1.3 hence since the three

projects are mutually exclusive, then you will be required

to select only alternative C.

Recall that the B/C method shows the benefits of a given alternative to the costs. If the ratio is higher it shows that the benefits are more than the cost. However, if the B/C ratio is low it means that the benefits are not much.Looking at the three results it is clear that alternatives A and C have higher benefit-cost ratios. Therefore, alternativeA and C may be compared to incrementally since they have B/C ratios.