The Benefit-Cost Ratio (BCR) is a key metric used in evaluating potential projects. Essentially, it is a way of summarizing the overall relationship between the relative costs and benefits of a proposed project.BCR can be expressed in either monetary or qualitative terms. If a project has a BCR greater than 1.0, it is generally considered to be a good investment, as it is expected to deliver a positive net present value to the firm and its investors.Projects with a BCR below 1.0 are generally not considered to be good investments, as the benefits are not expected to outweigh the costs.
However, there are always exceptions to this rule and each project must be evaluated on its own merits.When considering a potential project, the BCR is an important metric to take into consideration. It can give you a good overview of the potential costs and benefits, and help you make a decision on whether or not it is a good investment.
