Example: Breakeven Analysis Using a Spreadsheet (1)
Goal Seek tool finds breakeven value for
common variable between two alternatives
Two machines can manufacture a special brake pedal component. Estimates made.
(a) Use spreadsheet and AW analysis to select one at MARR = 10%
(b) Use Goal Seek tool to find the breakeven first cost P
(c) Use Goal Seek tool to find the breakeven uniform annual NCF
$A = \frac{P[i(1+i)^n]}{(1+i)^n - 1}$
Machines 1
2
A
B
C
D
MARR = 10%
Net cash flows, $/year
P, $
80,000
110,000
Year
Machine 1 Machine 2
0
-80,000 -110,000
NCF, $/yr
25,000
22,000
1
25,000 22,000
2
25,000 22,000
3
25,000 22,000
4
27,000 22,000
S, $
2,000
3,000
5
22,000
n, years
4
6
6
25,000
AW @ MARR
193
-2,868
