Three alternatives identified as X, Y, and Z were evaluated by the B/C method. The analyst calculated project B/C values of 0.92, 1.34, and 1.29. The alternatives are listed in the order of increasing equivalent total costs. The analyst is not sure whether an incremental analysis is needed.
(a) What do you think? If no incremental analysis is needed, why not; if so, which alternatives must be compared incrementally?
(b) For what type of projects is incremental analysis never necessary? If X, Y, and Z are all this type of project, which alternatives should be selected based on the calculated B/C values?
(a) Incremental analysis is needed between alternatives Z (challenger) and Y
(b) Incremental analysis is not needed for independent project; select Y and Z
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