38 When evaluating the viability of a project the test of ec

#38 When evaluating the viability of a project, the test of economic efficiency requires that:

Solution

b.NPV is greater than or equal to 0 and BCR is greater than or equal to 1.

for a project to be accepted using NPV , its NPV should be atleast zero or greater than zero.

for a project to be accepted using BCR, its BCR should be atleat one or greater than one.

NPV= present value of cash inflows - present value of cash outflows.

BCR (benefit cost ratio) = present value of cash inflows / present value of cash outflows.