The analyst often needs to classify certain cash flows as either added benefits or
reduced costs in calculating a B–C ratio. The questions arise, How critical is the
proper assignment of a particular cash flow as an added benefit or a reduced cost?
Is the outcome of the analysis affected by classifying a reduced cost as a benefit?
An arbitrary decision as to the classification of a benefit or a cost has no impact on project
acceptability. The mathematical rationale for this information is presented next and
in Example 10-5.