Comparing Alternatives

by B/C Ratio Method

 B/C Ratio Method
When comparing mutually exclusive
alternatives with the B-C ratio method the
following steps should be considered:
1. The alternatives are ranked first in order of
increasing total equivalent worth of costs (PW, AW,
or FW). The do-nothing alternative is selected as a
base alternative.
 B/C Ratio Method
2. The B-C ratio is then calculated for the alternative
having the lowest equivalent cost. It is greater than or
equal to 1.0, then it will be the new alternative;
otherwise, do-nothing remains as the base alternative.

3. The next least equivalent cost alternative is the

selected, and determine the incremental B-C ratio (∆B/
∆C) between this alternative and baseline.
 B/C Ratio Method
4. If (∆B/∆C) ≥ 1.0 , the next higher equivalent becomes
the new baseline; otherwise the last baseline alternative
is maintained.

5. The incremental B-C ratios are determined for each

successively higher equivalent cost alternative until the
last alternative has been compared.