1. Incremental Benefit Cost Analysis Example ABCDEFG Benefits1741801368013617889 Disbenefits460108 214 Costs10012090807011050 B – D C 1.71.01.40.91.81.61.5 Not Feasible Cost Order: G E C A F B E – G: G – DN: C – E: A – E: (136 – 89) – (10 – 14) = 51 = 2.55 (70 – 50) 20 Upgrade to E (136 – 136) – (10 – 10) = 0 = 0 (90 – 70) 20 Keep Proj. E (174 – 136) – (4 – 10) = 44 = 1.47 (100 – 70) 30 Upgrade to A (From feasibility, (B – D) / C = 1.5Upgrade to G

2. Incremental Benefit Cost Analysis Example ABCDEFG Benefits1741801368013617889 Disbenefits460108 214 Costs10012090807011050 B – D C 1.71.01.40.91.81.61.5 Not Feasible Cost Order: G E C A F B F – A: B – A: (178 – 174) – (2 – 4) = 6 = 0.6 (110 – 100) 10 Keep Proj. A (180 – 174) – (60 – 4) = – 50 = – 2.5 (120 – 100) 20 Best is Proj A

3. Bonus Problem: B/C Build-Up Example  Snack Fridge Viability Data: 110 IE & EngM students 48% will use snack fridge instead of going home Users average (2) drinks & (1) snack each week Mark-up is 10%, drink price is $.50, snacks $.75 School year averages 32 weeks Fridge costs $495, lasts 8 yrs, 8% cpd annually If they save time & $$ on snacks & drinks, they can buy books, study more, and expect one of them to win a $5 500 national scholarship every 4 years. But the vending company will quit donating $300 per year to their Tech Society Perform a B/C analysis – IE student perspective