Which of the following two investments (Z1 and Z2) is better from a PW point of view, and which is better from a BCR point of view? Use a 5% per annum interest rate for the calculations. Comment on why the comparison turns out the way it does.

Z1 Initial cost = $1000000 Annual benefit = $232000 Life = 5 years Z2 Initial cost = $1000 Annual benefit = $400 Life = 5 years Now consider an incremental analysis (Z1 – Z2).
Initial cost = $999000 Annual benefit = $228000 Life = 5 years What do incremental PW and incremental BCR measures tell you as to which is the better investment?
Based on this example, what don’t present worth and benefit:cost ratio tell you in a comparison between investments?