A measure that weighs the potential profit or benefit an investment is expected to generate against its original costs. The net present value (NPV) of future cash flow is often used as factor for calculating profit potential. If the NPV divided by the original cost produces a positive number, the benefits outweigh the costs.
Related information about cost-benefit ratio:
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A benefit-cost ratio (BCR) is an indicator, used in the formal discipline of cost- benefit analysis, that attempts to summarize the overall value for money of a project ...
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Definition of cost-benefit ratio: Comparison of the present value of an investment decision or project with its initial cost. A ratio of greater than one indicates that ...
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The net present value of an investment divided by the investment's initial cost. Also called the profitability index. Cost-Benefit Ratio. A ratio of whether or not and ...
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Cost-benefit analysis assesses the profitability of a financial endeavor by considering the present value of each cost and benefit. Present values are used under ...
- Cost-benefit ratio
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