Cost to Benefit Ratio Calculator
Calculate the cost to benefit ratio (BCR) to evaluate the financial viability of a project by comparing total monetary benefits to total costs.
Result
Calculation Steps
Cost-Benefit Breakdown
Formulas
Cost to Benefit Ratio Calculation
The benefit-cost ratio (BCR) is calculated as follows:
Where:
- BCR: Benefit to Cost Ratio
- MB: Total monetary benefit ($)
- TC: Total cost ($)
Usage Notes:
- Results are rounded to 2 decimal places.
- Total costs must be greater than 0.
- A BCR greater than 1 indicates that benefits exceed costs.
How to Use the Cost to Benefit Ratio Calculator
- Enter Total Benefits: Input the total monetary benefits expected from the project (e.g., revenue, savings).
- Enter Total Costs: Input the total costs associated with the project (e.g., construction, assessment).
- Choose Display: Select standard, step-by-step, or chart view.
- Calculate: Click “Calculate” to process inputs.
- View Results: Review the benefit-cost ratio.
- Reset: Click “Reset” to clear fields.
Frequently Asked Questions (FAQs)
What is the benefit-cost ratio (BCR)?
The benefit-cost ratio (BCR) is a financial metric that compares the total monetary benefits of a project to its total costs, indicating its economic viability.
How is the BCR calculated?
The BCR is calculated by dividing the total monetary benefits (MB) by the total costs (TC): BCR = MB ÷ TC.
What is a good BCR?
A BCR greater than 1 indicates that benefits exceed costs, suggesting a viable project. A BCR less than 1 suggests costs outweigh benefits, and a BCR equal to 1 indicates a break-even point.
Why is BCR important?
BCR helps decision-makers evaluate whether a project is worth pursuing by comparing its financial benefits to its costs, aiding in resource allocation.
Can benefits or costs be negative?
Benefits and costs should be non-negative for meaningful BCR calculations. Negative values may indicate data entry errors or non-viable projects.