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Breakeven Analysis
book

Breakeven Analysis

by Michael E. Cafferky, Jon Wentworth
August 2014
Intermediate to advanced content levelIntermediate to advanced
172 pages
3h 14m
English
Business Expert Press
Content preview from Breakeven Analysis

CHAPTER 14

Net Present Value Method

Net present value (NPV) is one of a group of topics often referred to as capital budgeting. It isn’t often viewed as a cost-volume-profit technique. In this method, we will calculate a cost or a value, which we will call the indifference point. Typically, an organization is faced with deciding between two alternatives, each of which will have the same result to the organization (hence, the indifference). Sometimes, one application of this method is called the outsource decision (or the make-or-buy decision).

Let’s get started with an example.

Example 1

Statewide Industries currently has a landscaping department to care for the vast, tastefully decorated grounds surrounding its office and laboratory complex. ...

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Publisher Resources

ISBN: 9781631570919