Benefit to Cost Ratio Calculator

Formula

The formula to calculate Benefit to Cost Ratio (BCR) is:

\[ BCR = \frac{MB}{TC} \]

Where:

$ BCR $ is the Benefit to Cost Ratio
$ MB $ is the Total Monetary Benefit ($)
$ TC $ is the Total Cost ($)

What is Benefit to Cost Ratio?

The Benefit to Cost Ratio (BCR) is a financial metric used to evaluate the overall value of a project or investment by comparing its benefits to its costs. A BCR greater than 1 indicates that the benefits outweigh the costs, while a BCR less than 1 suggests that the costs exceed the benefits. This ratio is often used in cost-benefit analysis to determine the feasibility and profitability of a project.

Example Calculation

Let's consider an example:

Total Monetary Benefit (MB): $150,000
Total Cost (TC): $100,000

Using the formula to calculate Benefit to Cost Ratio:

\[ BCR = \frac{150000}{100000} = 1.5 \]

This means that the benefit-to-cost ratio is 1.5, indicating that the benefits are 1.5 times the costs.