Analyses |

Performing a Breakeven Analysis |

In the previous example you computed the uniform periodic equivalent for a rent-buy scenario. Now let’s perform a breakeven analysis to see how the MARR affects the time values.

To perform the breakeven analysis, follow these steps:

Select both options.

Select

**Analyze Breakeven Analysis**.Enter 01JAN1996 for the

**Date**.Enter 12.0 for

**Value**.Enter 4.0 for

**(+/-)**.Enter 0.5 for

**Increment by**.Click

**Create Breakeven Analysis Summary**to fill the**Breakeven Analysis Summary**area as displayed in Figure 49.7.

Click **Graphics** to view a plot displaying the relationship between time value and MARR.

As shown in Figure 49.8, renting is better if you want a MARR of 12%. However, if your MARR should drop to 10.5%, buying would be better.

With a single investment, knowing where the graph has a time value of 0 tells the MARR when a venture switches from being profitable to being a loss. With multiple investments, knowing where the graphs for the various investments cross each other tells at what MARR a particular investment becomes more profitable than another.

Copyright © 2008 by SAS Institute Inc., Cary, NC, USA. All rights reserved.