The required investments, annual operating and maintenance costs, and annual
benefits for two mutually exclusive alternative projects are shown subsequently.
Both conventional and modified B–C ratios are included for each project. Note
that Project A has the greater conventional B–C, but Project B has the greater
modified B–C. Given this information, which project should be selected?
The B–C analysis has been conducted improperly. Although each of the
B–C ratios shown is numerically correct, a comparison of mutually exclusive
alternatives requires that an incremental analysis be conducted.