Suppose a municipality has excess funds to invest. It is choosing between the same investments described in the previous example. Government agencies often compute benefit-cost ratios to decide which investment to pursue. Which is best in this case?
Open the portfolio SASHELP.INVSAMP.NVST and compare the investments.
To compute the benefit-cost ratios, follow these steps:
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Select all five investments.
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Select Analyze
Benefit-Cost Ratio.
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Enter 01JAN1996 for the Date.
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Enter 9 for Constant MARR.
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Click Create Benefit-Cost Ratio Summary to fill the Benefit-Cost Ratio Summary area.
The results displayed in Figure 57.5 indicate that investments 2, 4, and 5 have ratios greater than 1. Therefore, each is profitable with a MARR of 9%.
