Benefit-Cost Ratio Calculator
Comprehensive cost-benefit analysis with ROI calculations and investment recommendations
Compare benefits vs costs ratio
Return on investment metrics
Investment risk evaluation
Data-driven investment advice
Cost-Benefit Analysis Parameters
Project Benefits
Project Costs
Used for present value calculations
Expected project lifetime
Understanding Benefit-Cost Ratio (BCR)
BCR Fundamentals
What is BCR?
The Benefit-Cost Ratio is a financial metric that compares the total expected benefits of a project to its total costs. A ratio greater than 1.0 indicates that benefits outweigh costs.
Formula
BCR = Total Benefits ÷ Total Costs
Where benefits include revenue, cost savings, and intangible gains, while costs include direct expenses, indirect costs, and opportunity costs.
Decision Rule
• BCR > 1.0: Accept the project
• BCR = 1.0: Indifferent (break-even)
• BCR < 1.0: Reject the project
Best Practices
Comprehensive Analysis
Include all relevant costs and benefits, both tangible and intangible. Consider direct, indirect, and opportunity costs for accurate evaluation.
Time Value of Money
Apply appropriate discount rates to account for the time value of money, especially for projects with long-term benefits and costs.
Risk Considerations
Factor in uncertainty and risk in both cost and benefit estimates. Consider sensitivity analysis to test different scenarios.