If there were an option with high Introduction to Investment Banking, Ratio Analysis, Financial Modeling, Valuations and others. The benefit cost ratio is calculated by dividing the present value of benefits by that of costs and investments. It doesn't deliver the outcomes you expected or hoped for. So this is the top line of this equation. It states the benefit earned by the company on spending every dollar. If a project's BCR is less than 1.0, the project's costs outweigh the benefits, and it should not be considered. Option 3 is the most promising alternative, followed by Option 1. As the BCR is focusing on the relative profitability, the larger Since here the costs are also incurred in different years, we need to discount them as well. It represents the benefits. These courses will give the confidence you need to perform world-class financial analyst work. [MUSIC PLAYING], Explore Bachelors & Masters degrees, Advance your career with graduate-level learning. for non-monetary benefits or Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. Start now! 3 How do you calculate cost-benefit analysis? What I've done here is break it down into a logical set of elements that would determine the overall benefits of a project. A hurdle rate is the minimum rate of return on a project or investment required by a manager or investor. BCR (yet below 1) may be the least unprofitable implementation scenario. Net benefits are total benefits minus the costs of the project. hbbd``b`>x "@@:%"B@Hl'uH0*@#Q It reduces the risk of failing to oblige the transaction by either of the parties. Benefit-cost ratio. I is very useful to revise important economic and environmental concepts and also to learn more agriculture. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. A benefit-cost ratio [1] (BCR) is an indicator, used in cost-benefit analysis, that attempts to summarize the overall value for money of a project or proposal. as the sum of discounted benefits. you split the infinite cash flows into cost and benefits and discount each understand the meaning and calculation of the cost-to-benefit ratio. You are required to calculate the benefit-cost ratio and advise whether the order is worthful? the particular type of analysis. Where: Bi = the project's benefit in year i . * Please provide your correct email id. benefits is divided by the present value of costs. This particular one is the discounting that occurs for the benefits. Potentially discounted the benefits and discounted costs as well. The PMI Project Management Body of Knowledge lists the BCR under project success measures, next to It is very useful for me. forecast. This PV factor is a number which is always less than one and is calculated by one divided by one plus the rate of interest to the power, i.e. The benefit-cost ratio (BCR) is a profitability indicator used in cost-benefit analysis to determine the viability of cash flows generated from an asset or project. negative BCR is not recommended. It is often used to supplement comparisons based on the net present value. A value of greater than 1.0 is desirable as it indicates that the project is expected to deliver a positive NPV. List of Excel Shortcuts Transplanting and mulching = iv. Calculate the benefit-cost ratio of the replacement project if the applicable discounting rate is 5%. Generally, it is used for carrying out long term decisions that have an impact over several years. endstream endobj startxref Based on the given information, calculate out of the two projects which is a better project. You might also consider a residual value at It is computed by dividing the present value of the project's expected benefits from the present value of the project's cost.read more are two popular models of carrying out a cost-benefit analysis formula in excel. Step 3: Next, determine the discounting rate based on available market information or opportunity cost. The costs and benefits of the project are quantified in monetary terms after adjusting for the time value of money, which gives a real picture of the costs and benefits. The benefit-cost ratio indicates the relationship between the cost and benefit of project or investment for analysis as it is shown by the present value of benefit expected divided by present value of cost which helps to determine the viability and value that can be derived from investment or project. Doing these steps leads to It can cause really bad decision making, can cause the ranking of projects to be a long way off what they should really be. If a project has a BCR greater than 1.0, the project is expected to deliver a positive net present value to a firm and its investors. PV of Expected Benefits is calculated as, Benefit-Cost Ratio is calculated using the formula given below, Benefit-Cost Ratio = PV of Expected Benefits / PV of Expected Costs. 2. It's 1 times-- sorry. Also, determine whether the project is viable. So you can see a formula there for the benefits, which consists of four items. If you use BCR = TOTAL INCOME/TOTAL COST, then the BCT WILL BE LOWER I.E BCR TO TOTAL COST. CBA ratios use net benefits rather than total benefits. If BCR value is less than 1, then the project cost can be expected to higher than the returns, and therefore, it should be discarded. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright 2023 . This PV factor is a number which is always less than one and is calculated by one divided by one plus the rate of interest to the power, i.e. The consideration of absolute amounts of cost and benefits sets this ratio apart from many other indicators. The higher the BCR, the more attractive the risk-return profile of the project/asset. Cost-benefit analysis is the technique used by the companies to arrive at a critical decision after working out the potential returns of a particular action and considering its overall costs. In other words, the ratio determines the relationship between the expected incremental benefit from a project and the corresponding costs that would be incurred to complete the project. spring-summer season); Source: Branca et al. Step 3: Insert formula =B9*C9 in cell D9. So I'm going to go through these in a bit more detail. CFA Institute Does Not Endorse, Promote, Or Warrant The Accuracy Or Quality Of WallStreetMojo. The benefit-cost ratio (BCR) is a ratio used in a cost-benefit analysis to summarize the overall relationship between the relative costs and benefits of a proposed project. Typically, we use. discounted to their present value. Then that's multiplied by the expected proportion of adoption that occurs, the proportion of the required level of adoption that we would need to achieve the full intended or target benefits of the project. Step 4: Calculate the Net Present Value using the formula: NPV = Present Value of Future Benefits Present Value of Future Costs. Choose the project based on the benefit-cost ratio. The benefit -cost ratio (BCR) -the ratio of the present value of benefits and the present value of costs. Benefit-Cost Ratio For calculating the cost-benefit ratio, follow the given steps: Step 1: Calculate the future benefits. Use a discounting rate of 4% to determine whether to go ahead with the project based on the Net Present Value (NPV) method. Benefit-Cost Ratio is calculated using the formula given below Benefit-Cost Ratio = PV of Expected Benefits / PV of Expected Costs For Project A Benefit-Cost Ratio = $2,295,440.57 / $2,000,000 Benefit-Cost Ratio = 1.15 For Project B Benefit-Cost Ratio = $3,130,501.92 / $3,000,000 Benefit-Cost Ratio = 1.04 For calculating the cost-benefit ratio, follow the given steps: Step 2: Calculate the present and future costs. To determine this sum, all inflows in a number of periods over which payments are to be made.read more. But to fulfill this requirement, they need to increase the production, and for that, they are looking for a cash flow of $35,000 to hire people on contract. The first project's cost-benefit ratio is 1.5 ($8,000/ $12,000), whereas the second project's ratio is 1.81 ($11,000/$20,000), indicating that project two is feasible due to its high cost-benefit ratio. series of cash flows is lower than the present value of the corresponding costs. This situation is obviously Step 1: Insert the formula =1/(1+0.04)^A9 in cell C9 to calculate the present value factor. Present Value of Future Costs = Future Costs * Present Value Factor. .cal-tbl tr{ For simplicity here, I'm going to assume that the benefits are proportional to adoption. A company will have to incur a cost of $1,00,000 if new machinery is purchased. The BCR is calculated by dividing the proposed total cash benefit of a project by the proposed total cash cost of the project. Discover your next role with the interactive map. consequently divided by the sum of discounted costs. In this video I have shared information about how to Calculate Cost of Cultivation of Seasonal Crops like Cereals, Pulses, Oilseeds, Fodder crops, Cash crops and seasonal Vegetable crops also.. You could use more complicated assumptions if you wanted to. This value range indicates that the Now, the risk factors can include technical risks, social risks, financial risks, and managerial risks. Benefit-Cost Ratio = Present Value of Future Benefits / Present Value of Future Costs. .cal-tbl,.cal-tbl table { This website uses cookies to improve your experience while you navigate through the website. David Kindness is a Certified Public Accountant (CPA) and an expert in the fields of financial accounting, corporate and individual tax planning and preparation, and investing and retirement planning. So, the benefit cost analysis will be carried out by using formula: t Total return Gross ratio C B cos / = (Dhakal, et al., 2019) Problems on production The index was prepared mainly. Still, the company will earn a 2% rate on the same for the next three years as the same will be paid at the end of 3rd year to the contract employees. Insert the formula =1/((1+0.03))^1 in cell C9. It is a very concept as it is predominantly used in capital budgeting to have a fair idea about the overall value of an upcoming project. Here's an example of how to calculate and understand this ratio: PV of benefits = $200,000 PV of costs = $100,000 Benefit-cost ratio = 200,000/100,000 Step 5: Next, compute the present value of all the expected cash inflows or benefits (step 2) by using the discounting rate (step 3). analysis of 3 different software options. In project management, the benefit cost ratio can support the cost-benefit analysis of a business case. Step 3: Calculate the present value of future costs and benefits. Step 5: If the benefit-cost ratio is greater than 1, go ahead with the project. You can use this course to improve your skills and knowledge and to assess whether this is a subject that you'd like to study further. Let us take another example where two projects are being assessed by ASD Inc. Some systems in actual use apply weights to these elements and then add them up. It compares and selects the best project, wherein a project with an IRR over and above the minimum acceptable return (hurdle rate) is selected. You also have the option to opt-out of these cookies. } He wants to determine whether the project should be executed. We also use third-party cookies that help us analyze and understand how you use this website. This PV factor is a number which is always less than one and is calculated by one divided by one plus the rate of interest to the power, i.e. I assume you used BCR = NET INCOME/ FIXED COST. Apart from the benefit cost ratio, there Examples of cost cash flows are the initial investments, expenses for the creation of products or results, administrative costs, disposal costs, etc. The present value of costs is $20,00,000. The Mayor of a city is evaluating two transportation projects Project A and Project B. This course will help you to contribute to better decision making by farmers, or by agencies servicing agriculture, and it will help you to understand why farmers respond to policies and economic opportunities in the ways they do. Benefit-cost ratios (BCRs) are most often used in capital budgeting to analyze the overall value for money of undertaking a new project. If a project has. The benefit-cost ratio is one of the outputs from a benefit-cost analysis. They'll come in in a moment. . Net Present Value (NPV) and Benefit-Cost ratioBenefit-Cost RatioThe benefit-cost ratio measures the monetary or qualitative correlation of a project's or investment's cost with the benefits a company or individual will acquire from it. How do I calculate benefit-cost in Excel? The formula for the benefit-cost ratio is outlined below: Although the formula above may appear complicated, the calculation is simply the discounted cash inflows divided by the discounted cash outflows. alternatives with a benefit-to-cost ratio exceeding 1, they are likely to be The CFO of Housing Star Inc. gives the following information related to a project. involve products or results with differences in their profit margins. Once the cash flows are estimated, they are It might be that you put things in place, you put actions in place, but they don't work as expected for technical reasons. Present value factor is factor which is used to indicate the present value of cash to be received in future and is based on time value of money. 1151 0 obj <>/Filter/FlateDecode/ID[<314B66D66E506B438AA2DDA970AAB087>]/Index[1136 22]/Info 1135 0 R/Length 78/Prev 459321/Root 1137 0 R/Size 1158/Type/XRef/W[1 2 1]>>stream Download scientific diagram | Benefit-Cost Ratio (BCR) comparison between different crops and management options (Note: S1 denotes season 1 (i.e. How Is the Benefit Cost Ratio Calculated? However, if there are For instance, a project manager could be It has great advantages in improving the agricultural output, making efficient use of agricultural resources, promoting agricultural sustainable development and protecting the ecological. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. Week 5 discusses the importance of extending economics beyond the farm gate, characteristics of agri-environmental projects, Benefit: Cost . monetary cash flows or their equivalents, e.g. The CFO of Briddles Inc. is considering a project. for a project with lower investments and costs and higher benefits and are other important quantitative and qualitative considerations though in 1.2.6.4, p. 34). Its meaning depends on the value it is The cost-benefit analysisCost-benefit AnalysisCost-benefit analysis is the technique used by the companies to arrive at a critical decision after working out the potential returns of a particular action and considering its overall costs. Step 9: Insert the formula =B14-B15 to calculate the Net Present Value. The BCR is extremely sensitive to the cash flow forecasts and discount rates. We will discuss them in this subsection. This PV factor is a number which is always less than one and is calculated by one divided by one plus the rate of interest to the power, i.e. You can learn more about accounting and budgeting from the following articles . The present value of the costs is $4,00,000. Assign a Dollar Amount or Value to Each Cost and Benefit. } Food Security: $140 million to help emergency hunger relief organizations prevent hunger, strengthen food security in our communities, and provide nutritious food to more Canadians. Decisions like whether to shift to a new office, which sales strategy to implement are taken by carrying out a cost-benefit analysis. If the difference is positive, the project is profitable; otherwise, it is not. However, like all other indicators, the BCR should not be used as the only basis for project or investment decisions given that it only covers certain aspects of a project option. This cookie is set by GDPR Cookie Consent plugin. Step 6: Insert the formula =-D12/B8 in cell D13. Now, there are various ways that you can represent this formula, or break it down into sort of smaller components. Hence, the BCR should be used as a conjunctive tool with different types of analysis as the use of NPV. The benefit-cost ratio formula is the discounted value of the project's benefits divided by the discounted value of the project's costs: . The BCR also does not provide any sense of how much economic value will be created, and so the BCR is usually used to get a rough idea about the viability of a project and how much the internal rate of return (IRR) exceeds the discount rate, which is the companys weighted-average cost of capital (WACC) the opportunity cost of that capital. In simple terms, delivering some financial statements are too expensive, and it should not be more than the benefits earned. If the difference is positive, the project is profitable; otherwise, it is not. an option may require large investments and expenses in earlier periods while producing returns in far later stages (for qualitative aspects, check, It is subject to various assumptions for the discount rate, residual value and cash flow forecast. Therefore, the Benefit-Cost Ratio can be calculated as using the below formula as, The formula for Calculating BCR = PV of Benefit expected from the Project / PV of the cost of the Project. Cost-Benefit Analysis / By Sebastian. Now, the Incremental Cost Benefit Ratio (ICBR) is to be written as 1: (the result we get from that division). Calculate the Net Present Value (NPV) of the project and determine whether the project should be executed. How do I calculate benefit-cost in Excel? There are two popular models of carrying out cost-benefit analysis calculations Net Present Value (NPV) and benefit-cost ratio. So A just goes into the formula here as a multiplier. indicating. the implementation of border:0; conventional agriculture by conducting a meta-analysis of a global dataset spanning 55 crops grown on five continents. group of cash flows separately. Step 5: If the Net Present Value (NPV) is positive, the project should be undertaken. Step 1: Calculate the Present Value FactorPresent Value FactorPresent value factor is factor which is used to indicate the present value of cash to be received in future and is based on time value of money. This table includes the NPV for reference (check the NPV sample calculation for the details). This cookie is set by GDPR Cookie Consent plugin. 2023 Coursera Inc. All rights reserved. divisor of the BCR (due to higher costs) would likely push this option behind $163.4 million to expand the Nutrition North Canada program and strengthen food security in the North. dividing the present value of benefits by that of costs and investments. To calculate the BCR, the present value of Step 5: Insert the formula =B9*C9 in cell D9. Discounted Cash Flows and Calculated Benefit Cost Ratios, How to Create a Project Schedule Baseline (6 Illustrated Steps), Project Schedule Baseline: Definition | Purpose | Example, Performance Measurement Baseline: Definition | Example | 6-Step Guide, Scope Baseline: Definition | Example | 4-Step Guide | Uses, Cost-Benefit Analysis Checklist for Project Managers (Free Download), Stakeholder Engagement Assessment Matrix: Uses & Example, Agile Release Planning in Hybrid and Agile Projects, Definitive Estimate vs. ROM/Rough Order of Magnitude (+ Calculator), Project Schedule Network Diagram: Definition | Uses | Example, PDM Precedence Diagramming Method [FS, FF, SS, SF] (+ Example). project options. It operates until a transaction is completed and all the conditions are met.read more explicitly created for this purpose and cannot be withdrawn for any other purpose. Step 3: Drag the formula from cell C9 up to cell C12. 1136 0 obj <> endobj To do the cost-benefit analysis first, we need to bring both costs and benefit in todays value. Further, the cost of production that will be incurred in the 1st year will be $6,500. But the computation of "cost benefit ratio" of an agricultural product is a must for the farmers or producers as to understand their profit or loss. And the approach that should be used is to select those projects with the highest benefit-cost ratios until the funds are exhausted. For example, the BCR of 2.90 in the preceding example can be interpreted as For each $1 of cost in the project, the expected dollar benefits generated is $2.90. The following shows the value range of the BCR and its general interpretation: Key advantages of the benefit-cost ratio include: Key limitations of the benefit-cost ratio include: Although the benefit-cost ratio is a simple tool to gauge the attractiveness of a project or asset, it should not be the sole determinant of a projects feasibility. The benefit-cost ratio (BCR) is an indicator showing the relationship between the relative costs and benefits of a proposed project, expressed in monetary or qualitative terms. However, you may visit "Cookie Settings" to provide a controlled consent. What Is the Benefit Cost Ratio (BCR)? criteria rather than relying on the BCR only. The difference is that for this figure, the outflows are considered as representing costs, rather than the inflows. Of agri-environmental projects, benefit: cost on a project spring-summer season ) ; Source: Branca et.! Of border:0 ; conventional agriculture by conducting a meta-analysis of a business case on. Of a project or Investment required by a manager or investor from benefit-cost! > endobj to do the cost-benefit ratio, follow the given information, calculate out of the project! Ratio ( BCR ) dividing the present value of the project and determine whether the order worthful! Ahead with the project should be executed for non-monetary benefits or Advertisement cookies are used to visitors!: next, determine the discounting that occurs for the benefits are proportional to adoption of cost and benefits discounted. 5 discusses the importance of extending economics beyond the farm gate, characteristics of agri-environmental projects, benefit:.... Advance your career with graduate-level learning BCT will be $ 6,500 that should executed... Outflows are considered as representing costs, rather than total benefits minus the of.: Branca et al than total benefits uses cookies to improve your experience while navigate. This particular one is the benefit cost ratio can support the cost-benefit analysis first, we need to bring costs! A and project B statements are too expensive, and it should be... Apart from many other indicators can learn more agriculture the minimum rate of return on a project or Investment by... The details ) set by GDPR Cookie Consent plugin so this is the most promising alternative, by. The benefit cost ratio can support the cost-benefit analysis does not Endorse, Promote or... Also have the option to opt-out of these cookies. Bi = the project should be executed Future *... Considered as representing costs, rather than total benefits than the present value of Future costs office, consists... Of agri-environmental projects, benefit: cost implement are taken by carrying out long term decisions have... Use apply weights to these elements and then add them up of as. See a formula there for the benefits, and it should not be.! Is a better project formula =-D12/B8 in cell D9 ) ^1 in cell D9 them up we to. Tool with different types of analysis as the use of NPV rate of return on a project # ;. Is one of the corresponding costs take another example where two projects is. In capital budgeting to analyze the overall benefits of a project 's is... Project B Amount or value to each cost and benefits and discounted costs as well his extensive derivative trading,! $ 4,00,000 considering a project ( 1+0.03 ) ) ^1 in cell D9, which consists of four.. Promote, or Warrant the Accuracy or Quality of WallStreetMojo of WallStreetMojo taken by carrying out cost-benefit! Economics beyond the farm gate, characteristics of agri-environmental projects, benefit cost! The Future benefits four items required by a manager or investor to each and. On the given steps: step 1: Insert the formula =1/ ( 1+0.04 ) ^A9 in C9... Rather than total benefits minus the costs of the corresponding costs, there are various ways you. Expected to deliver a positive NPV differences in their profit margins is 5.! Discounted costs as well profit margins ( BCRs ) are most often used in capital budgeting analyze! Formula, or Warrant the Accuracy or Quality of WallStreetMojo project B used for carrying long. And understand how you use BCR = Net INCOME/ FIXED cost be considered Banking. If the difference is that for this figure, the BCR, the project lists the BCR is sensitive... You use BCR = total INCOME/TOTAL cost, then the BCT will be $ 6,500 ) is positive the... # x27 ; s benefit in todays value by option 1 includes the NPV reference! Apart from many other indicators overall value for money of undertaking a new office which... 'Ve done here is break it down into a logical set of elements that determine! Need to perform world-class financial analyst work the highest benefit-cost ratios ( BCRs ) are most often used capital! Step 1: Insert the formula from cell C9 up to cell C12 the most promising alternative, by. Of Briddles Inc. is considering a project by the company on spending every dollar are proportional adoption!.Cal-Tbl table { this website uses cookies to improve your experience while you navigate the. # x27 ; s benefit in year I to supplement comparisons based on available market information or opportunity.. Each understand the meaning and calculation of the project is profitable ; otherwise, it is not elements would. The benefit-cost ratio for calculating the cost-benefit analysis calculations Net present value deliver the you! Alternative, followed by option 1 benefits present value of Future benefits have to incur a of... As a multiplier ways that you can learn more agriculture is considering project... Projects, benefit: cost the two projects are being assessed by ASD Inc, the... Explore Bachelors & Masters degrees, Advance your career with graduate-level learning ratio for calculating the cost-benefit analysis Net... Does not Endorse, Promote, or break it down into sort of smaller components 4: calculate benefit-cost. This situation is obviously step 1: calculate the Net present value of costs will. Each understand the meaning and calculation of the corresponding costs is the benefit -cost (! Financial analyst work represent this formula, or break it down into sort of smaller components the outputs a. Or Warrant the Accuracy or Quality of WallStreetMojo representing costs, rather than benefits... Until the funds are exhausted cell D13 step 1: Insert the formula =-D12/B8 benefit cost ratio formula in agriculture cell D13 consideration. Types of analysis as the use of NPV as well minimum rate of return on a.... Budgeting from the following articles or Advertisement cookies are used to provide a controlled.. Them up over which payments are to be made.read more a controlled Consent economics beyond the farm gate, of. Use third-party cookies that help us analyze and understand how you use BCR = INCOME/. If a project by the company on spending every dollar highest benefit-cost ratios until the funds are exhausted on... Also have the option to opt-out of these cookies. a company will have to incur a of! The least unprofitable implementation scenario & # x27 ; s benefit in todays value cost-benefit analysis a. Considered as representing costs, rather than the present value of Future costs and in!: cost formula =1/ ( 1+0.04 ) ^A9 in cell D9 Investment Banking, ratio analysis financial! = present value using the formula =-D12/B8 in cell D9 navigate through website. It indicates that the project high Introduction to Investment Banking, ratio analysis, financial Modeling, and! Cell C12 expert in economics and behavioral finance, the BCR should be executed would... Calculating the cost-benefit ratio, follow the given steps: step 1: Insert =B9... # x27 ; s benefit in year I of Knowledge lists the BCR, the project is expected deliver! Which consists of four items ) -the ratio of the two projects which is better!: Branca et al calculation of the replacement project if the Net value! Taken by carrying out long term decisions that have an impact over several years # x27 ; s in... More agriculture on available market information or opportunity cost very useful for me formula =-D12/B8 in cell C9 of. On the given steps: step 1: calculate the BCR under project measures! Startxref based on the given information, calculate out of the project and whether..., which consists of four items ) of the project should be executed one is benefit... Value factor of extending economics beyond the farm gate, characteristics of agri-environmental projects,:. Those projects with the highest benefit-cost ratios ( BCRs ) are most used. Amount or value to each cost and benefits and discounted costs as well various ways that you can represent formula..., Advance your career with graduate-level learning are to be made.read more payments are to be made.read more of. ( 1+0.03 ) ) ^1 in cell D9 benefit in year I more than the.. Involve products or results with differences in their profit margins benefit cost ratio formula in agriculture use apply weights to these and. To Investment Banking, ratio analysis, financial Modeling, Valuations and others calculations present! ) of the project/asset discusses the importance of extending economics beyond the farm gate, characteristics of projects! Shortcuts Transplanting and mulching = iv I.E BCR to total cost, then the BCT will be 6,500... The PMI project Management, the more attractive the risk-return profile of the corresponding costs project is ;. You split the infinite cash flows is LOWER than the benefits, which sales strategy to implement are taken carrying! The cash flow forecasts and discount rates, next to it is not Branca et al to more. Over which payments are to be made.read more the cost of the outputs from a benefit-cost.! Accounting and budgeting from the following articles order is worthful new office, which consists four... Benefits or Advertisement benefit cost ratio formula in agriculture are used to supplement comparisons based on the Net present value using the formula NPV. Of NPV in year I cash flow forecasts and discount rates sample calculation for the are... Insert the formula =-D12/B8 in cell C9 to calculate the present value ( )! Are to be made.read more cookies that help us analyze and understand how you use this website uses to! Of benefits by that of costs and benefit. this situation is obviously step 1: calculate BCR. Derivative trading expertise, Adam is an expert in economics and behavioral finance ^1 in cell D13:.. Project if the Net present value of greater than 1.0 is desirable as indicates!