Benefit to Cost Ratio Calculator

Benefit to Cost Ratio Calculator calculator can be used to evaluate the efficiency of an investment or project by comparing the total expected benefits to the total expected costs.

Input Parameters

Calculation Results

Calculation Formula

BCR = Total Benefits / Total Costs

Where:
BCR = Benefit to Cost Ratio
Total Benefits = Sum of all expected benefits over the project lifetime
Total Costs = Sum of all expected costs over the project lifetime

Benefit to Cost Ratio Calculator Usage Guide

Learn how to use the Benefit to Cost Ratio Calculator and its working principles

How to Use This Calculator

  1. Enter the Total Expected Benefits in the first input field. This should represent the total value of benefits expected from the project over its lifetime.
  2. Enter the Total Expected Costs in the second input field. This should represent the total costs associated with the project over its lifetime.
  3. Click the Calculate button to compute the Benefit to Cost Ratio.
  4. The calculator will display the BCR value and provide an interpretation of whether the investment is acceptable.

Understanding Benefit to Cost Ratio

The Benefit to Cost Ratio (BCR) is a financial metric used to evaluate the efficiency of an investment or project. It compares the total expected benefits to the total expected costs.

Interpretation Guide:

  • BCR > 1.0: The benefits outweigh the costs, making the investment potentially profitable.
  • BCR = 1.0: The benefits equal the costs, resulting in a break-even scenario.
  • BCR < 1.0: The costs outweigh the benefits, suggesting the investment may not be worthwhile.

Practical Applications

BCR is widely used in:

  • Government project evaluation
  • Business investment decisions
  • Infrastructure planning
  • Environmental projects

Note: While BCR is a useful metric, it should be considered alongside other financial metrics like Net Present Value (NPV) and Internal Rate of Return (IRR) for comprehensive investment analysis.