Just substitute the values of discount rate and the number of years … Incremental cost is the amount of money it would cost a company to make an additional unit of product. An incremental analysis must always be used to compare alternates when using a B/C ratio approach. Incremental Benefit-Cost Ratio for Name Brand over Professional: ,ି଼,ସ ଵ଼,ହହିଷଶ,ସ = 0.845 The Incremental Benefit-Cost Ratio is less than 1, therefore, the Name Brand nail gun will be selected. Cost–utility analysis. N = 5 i = 10% The page provides you the Cost benefit ratio formula to calculate the Benefit-Cost Ratio. Benefit-Cost Analysis 6 The Benefit-cost analysis is commonly used to evaluate public (government) projects. The most common expression of this form of ICER is as cost (£) per incremental gain in the quality adjusted life years (£ per QALY). Benefit-Cost Analysis 5 Framework of Benefit-Cost Analysis Valuation of Benefits and Costs Benefit-Cost Ratios Incremental B-C Analysis 6. C 3.36 1.32 0.76 0.33 15 A, B, C, and D are above the 45-degree line; their B/C ratio is > 1. In this form of analysis the ICER is expressed as the ratio of the incremental costs to the incremental utility gain. For ACS patients, when a sustained benefit of high-dose statins beyond 5 years is assumed, the incremental cost-effectiveness ratio (ICER) for a high-dose statin strategy would remain under $44 000 per QALY even when the net daily price difference between high- and conventional-dose statins was $3.50 . The Nail Gun type with best Benefit-Cost Ratio is … 3) Determine the project of choice using: A) Benefit to cost ratio B) Incremental Benefit to cost ratio P.W of Cost P.W of Benefit Project $15,500 $28,200 1 $13,500 $25,300 2 $2,800 $1,500 3 $5,300 $12,500 4 This can be represented by the following formula: F is below the line: B/C ratio is < 1. Incremental Benefit-Cost Ratio If more than one alternative is considered for a single project, an incremental benefit-cost ratio can be used to determine which Alternative(s) are the most economically desirable (optimize additional benefits gained for the added cost). Alternatives are considered in increasing order of total discounted costs until all are considered. Incremental net monetary benefit (INMB) as the value of incremental effects (АДЕ) less incremental costs (ДС), INMB = АДЕ - ДС, provides a continuous metric that does not face the decision ordering problems of the ICER as a ratio, while representing the same decision rule. Benefit/Cost Ratio Analysis – Graphical representation B-D A-B C - A E-A Incremental Cost $1000 $2000 $2000 $5000 Incremental Benefit $3360 $2630 $1400 $1670 Incr.B/Incr. It is calculated by dividing discounted value of incremental benefits by discounted value of incremental costs. Example : A current process costs $50,000/yr. 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