Discount rate

Initial investment (thousands of $)

Useful life (years)

20%
1000
8

all figures in thousands of $

project A

year
revenue
cost
investment
net value
discount factor
present value
NPV
present value annual benefits
present value annual costs
present value investment
PV total benefits (B)
PV total annual costs (Cr)
PV total costs (Ck + Cr)
PV benefit/cost ratio B/(Ck + Cr)
PV net benefit/cost ratio (B - Cr)/Ck

0
0
0
1000
-1000
1.00
-1000.00
36.03

1
370
100
0
270
0.83
225.00

0.00
0.00
1000
1419.75
383.72
1383.72
1.03
1.04

308.33
83.33
0

2
370
100
0
270
0.69
187.50

3
370
100
0
270
0.58
156.25

4
370
100
0
270
0.48
130.21

5
370
100
0
270
0.40
108.51

6
370
100
0
270
0.33
90.42

7
370
100
0
270
0.28
75.35

8
370
100
0
270
0.23
62.79

256.94
69.44
0

214.12
57.87
0

178.43
48.23
0

148.69
40.19
0

123.91
33.49
0

103.26
27.91
0

86.05
23.26
0

all figures in thousands of $

project B

year
revenue
cost
investment
net value
discount factor
present value
NPV
present value annual benefits
present value annual costs
present value investment
PV total benefits (B)
PV total annual costs (Cr)
PV total costs (Ck + Cr)
PV benefit/cost ratio B/(Ck + Cr)
PV net benefit/cost ratio (B - Cr)/Ck

0
1000
-1000
1.00
-1000.00
-126.25
0.00
0.00
1000
2024.89
1151.15
2151.15
0.94
0.87

1
0
300
0
-300
0.83
-250.00
0.00
250.00
0

2
0
300
0
-300
0.69
-208.33

3
0
300
0
-300
0.58
-173.61

4
1170
300
0
870
0.48
419.56

5
1170
300
0
870
0.40
349.63

6
1170
300
0
870
0.33
291.36

7
1170
300
0
870
0.28
242.80

8
1170
300
0
870
0.23
202.33

0.00
208.33
0

0.00
173.61
0

564.24
144.68
0

470.20
120.56
0

391.83
100.47
0

326.53
83.72
0

272.10
69.77
0

Project
NPV
Benefit/cost ratio B/(Ck + Cr)
Net benefit/cost ratio (B - Cr)/Ck

A
36.03 $
1.03
1.04

B
Best?
(126.25) $ Project A
0.94
Project A
0.87
Project A