The correct answer is: B. Benefit-cost ratio
The benefit-cost ratio (BCR) is a measure of the efficiency or profitability of a project or investment. It is calculated by dividing the total expected benefits of the project by the total expected costs. A BCR greater than 1 indicates that the project is expected to be profitable, while a BCR less than 1 indicates that the project is expected to be unprofitable.
The BCR is often used in municipal project evaluations where benefits and costs accrue to different segments of the community. This is because the BCR allows for a comparison of projects with different costs and benefits, even if those costs and benefits are not evenly distributed across the community.
The other options are incorrect because:
- The annual cost method is a method of calculating the total cost of a project over its lifetime. It is calculated by adding up the initial cost of the project, the annual operating costs, and the annual maintenance costs.
- The rate of return method is a method of calculating the profitability of a project. It is calculated by dividing the annual net income of the project by the initial investment.
- The EUAC is the equivalent uniform annual cost of a project. It is calculated by dividing the total cost of the project by the number of years of the project’s life.