Graphical Representation

The following graphs show how projects can be compared using various summary measures of benefit-cost analysis. Each alternative project is represented by a dot on the graph; its benefits are measured vertically and costs horizontally. The red dots represent the best performing projects.

The following graph illustrates a benefit/cost ratio. The project with the steepest slope has the highest ratio of benefits to costs.

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The following graph illustrates net present value. A 45° line is drawn through each point. The project with the highest vertical intercept has the highest net present value.

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The following graph shows how the project with the highest net present value need not have the highest benefit-cost ratio. Any project located within the triangle below will have both a higher benefit-cost ratio and a lower net present value than the project represented by the red dot.

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The following graphs illustrate cost-effectiveness. The first compares the costs for a given benefit; the second compares the benefits that can be achieved at a given cost.

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