NPV sensitivity in relation to quantity of annual product according to type of depreciation
Autores: González-Núñez, José Luis (Universidad Autónoma de Barcelona)
Using the sensibility analysis, we develop a model that determines the quantity of annual product that annuls the NPV, depending on two assumptions in relation to the depreciation. In the first, it is considered as a fixed cost and is calculated based on three methods (straight line, increasing and decreasing digits); in second, the depreciation depends on the quantity of annual product (constant, increasing or decreasing depending on law geometric) and the productive capacity of equipment. Are added other aspects such as equity or debt financing, the discrete or continuous character of production and when we do not consider the value of money over time, coinciding in the latter case with the break-even point. With decreasing depreciation, debt financing, continuous production or when we do not consider the value of the money in the time, we need less quantity of product to annul the NPV