You are asked questions about 5 mutually exclusive candidates described as follows (all quantities are in thousands):
Candidate 1: Present worth of costs = $1,000; Present worth of benefits = $8,000
Candidate 2: Present worth of costs = $4,000; Present worth of benefits = $8,000
Candidate 3: Present worth of costs = $4,000; Present worth of benefits = $14,000
Candidate 4: Present worth of costs = $10,000; Present worth of benefits = $ 16,000
Candidate 5: Present worth of costs = $12,000; Present worth of benefits = $ 24,000
(a) Which system has the largest B/C ratio and should it be selected without further study or not? Explain.
(b) Which system shows the largest incremental B/C ratio based on differences between alternatives?
(c) Which system would you recommend and why?