B AW Benefits A

ratio A =
C AW Cost A

AW Benefits A
1.45=
P 200,000

AW Benefits A =P 290,000

B AW Benefits B
ratioB =
C AW Cost B

AW Benefits B
1.78=
P 300,000

AW Benefits B=P 534,000

B AW Benefits C
ratioC =
C AW Cost C

AW Benefits C
1.79=
P 250,000

AW Benefits C =P 447,500

AW Cost A < AW Cost C < AW Cost B ; Project A as thebaseline

B AW benefits , Project A
Ratio =
C Project A AW costs , Project A

B P 290,000
Ratio =
C Project A P 200,000

B
Ratio =1.45
C Project A
B
Ratio ≥ 1.0 ,then the Project A is acceptable
C Project A

∆B AW benefits , Project C − AW benefits , Project A

Ratio =
∆C Project −Project
C A
AW costs, Project C − AW costs ,Project A
∆B P 447,500−P 290,000
Ratio =
∆C Project −Project
C
P 250,000−P 200,000
A

∆B
Ratio =3.15
∆C Project −Project
C A

∆B
Ratio ≥1.0 . Thus theincrement required for Project C is acceptable
∆C Project C
−Project A
 ∆B AW benefits , ProjectB − AW benefits , Project C
Ratio =
∆C Project −Project
B C
AW costs , ProjectB − AW costs ,Project C
∆B P 534,000−P 447,500
Ratio =
∆C Project −Project
B C
P300,000−P250,000
∆B
Ratio =1.73
∆C Project −Project
B C

∆B
Ratio ≥ 1.0 .Thus the increment required for Project B is acceptable
∆C Project B
−ProjectC
DECISION : PROJECT B SHOULD BE SELECTED