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Costs & investments

Investment appraisal with income statement, NPV and IRR, machine hour cost, break-even, make or buy, equipment buy vs. lease and working capital.

Machine hour rate

Calculate a machine hour rate with depreciation, interest on capital, energy, maintenance, floor space, insurance, overhead and operator, and the cost per good part from cycle time and OEE.

Fixed, variable, per part

Break-even and product mix

Compute the break-even point of a product mix, contribution margin and profit, and find the most profitable mix when a bottleneck machine limits output.

CM, optimal mix, bottleneck

Make or buy

Compare making in-house with buying from a supplier on incremental cost, see the volume above which making pays and the NPV, IRR and payback of the investment.

Incremental cost, break-even, NPV

Buy, finance or lease

Compare buying with cash, financing, renting and leasing a machine or vehicle on present value cost, with resale, maintenance and tax shields.

Loan, lease, rent, tax

Cash cycle and working capital

Compute the operating and cash conversion cycles from inventory, collection and payment days, the working capital requirement, its funding cost and the cash freed by shortening the cycle.

DIO, DSO, DPO

Investment NPV and IRR

Build the cash flow and income statement of an industrial project, with ramp-up, working capital, MACRS or bonus depreciation, federal and state tax and financing, and get NPV, IRR, payback and sensitivity.

Cash flow, P&L, NPV, IRR, loan