Calculate benefit-to-cost ratio, total monetary benefit, or total cost from the other two values with this benefit-cost calculator.
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Benefit to Cost Ratio Formula
The benefit to cost ratio compares monetary benefits with positive costs on a consistent time and dollar basis. Choose the quantity to solve for and enter the two displayed known values. For multi-period analysis, supply discounted present-value totals; this calculator does not apply a discount rate. Negative benefits represent disbenefits. USDOT’s benefit-cost guidance explains present-value analysis.
Rearranged formulas used when solving for a missing value:
- BCR = benefit to cost ratio
- B = total monetary benefit
- C = total cost
If you enter total monetary benefit and total cost, the calculator divides benefit by cost to find the benefit to cost ratio.
If you enter total cost and benefit to cost ratio, the calculator multiplies them to find the total monetary benefit.
If you enter total monetary benefit and benefit to cost ratio, the calculator divides benefit by the ratio to find the total cost.
Benefit to Cost Ratio Interpretation
| BCR Result | Meaning | Basic Interpretation |
|---|---|---|
| Less than 1.00 | Costs are greater than benefits | The option may not be financially worthwhile based on the inputs. |
| Exactly 1.00 | Benefits equal costs | The supplied monetary benefits and costs are equal; risk and omitted effects still matter. |
| Greater than 1.00 | Benefits are greater than costs | The option produces more monetary benefit than it costs. |
Common Benefit to Cost Ratio Inputs
| Input | What to Include | Example |
|---|---|---|
| Total Monetary Benefit | Revenue, savings, avoided losses, or other measurable gains | $150,000 in expected savings |
| Total Cost | Initial cost, operating cost, maintenance, labor, and other required spending | $100,000 project cost |
| Benefit to Cost Ratio | Benefit divided by cost | 1.50 means $1.50 of benefit per $1.00 of cost |
Example Problems
Example 1: Calculate the benefit to cost ratio
Suppose a project has a total monetary benefit of $240,000 and a total cost of $160,000.
The benefit to cost ratio is 1.50. This means the project returns $1.50 in benefit for every $1.00 in cost.
Example 2: Calculate total monetary benefit
Suppose the total cost is $75,000 and the benefit to cost ratio is 1.80.
The total monetary benefit is $135,000.
FAQ
What is a good benefit to cost ratio?
A benefit to cost ratio greater than 1.00 is usually considered favorable because the measured benefits are higher than the costs. For example, a BCR of 1.25 means you receive $1.25 in benefit for every $1.00 spent. A higher ratio is generally better, but the decision should also consider risk, timing, assumptions, and non-monetary factors.
Can the benefit to cost ratio be less than 1?
Yes. A BCR less than 1 means the total cost is greater than the total monetary benefit. For example, a BCR of 0.80 means you receive $0.80 in benefit for every $1.00 spent.
Is benefit to cost ratio the same as profit?
No. Benefit to cost ratio divides benefits by costs. Net monetary benefit subtracts costs from benefits and is not necessarily accounting profit. If benefits are $120,000 and costs are $100,000, the BCR is 1.20 and net monetary benefit is $20,000.
