MUTUALLY EXCLUSION OF PROJECTS OF DIFFERENT VALUES BY THE BENEFIT-COST METHOD

Abstract

The recovery of an investment is very important in the world of economy. While businesses are preparing long-term projects for investment purposes, basic criteria such as changing economic conditions, risks, cash flows of the project, discount rate to be applied, economic life should be estimated in advance. For this reason, businesses prepare different projects that can provide the same economic conditions for the projects they prepare. In order to compare these projects, a cost-benefit table is prepared and evaluated in terms of their advantages. In line with these values, it is ensured that the most correct project is selected by eliminating each other. In this study, the cost-benefit ratio method was applied to three different projects. For all three projects, 10% annual interest and numerical values between 15 and 60 years of life are given. As a result of the evaluation of the projects, the most suitable project was determined by eliminating each other. Cash flows are calculated based on present and annual equivalents.