Calculate ROI Net Present Value
Explanation
Use this function to calculate return on investment with the Net Present Value method
for the defined Kaizen activity.
Prerequisites
This activity has the following prerequisites:
- A kaizen cost plan needs to be defined.
- The NPV return on investment method has to be
selected.
System Effects
This activity will calculate the return on investment for the selected line item and
evaluate whether it will be approved or not according to the required NPV ratio.
Window
Part Cost
Related Window Descriptions
Net Present Value (NPV)
Procedure
- Open the Part Cost/Kaizen
Cost tab.
- Select a line with the NPV ROI Method, right-click and then click
Calculate ROI.
- The Net Present Value (NPV) dialog
box appears.
- In the ROI Period field, enter a return on investment period.
- In the Financial Rate (%) field, enter a financial rate.
- In the Cost Reduction field, enter a cost reduction value.
- In the Production Rate field, enter a production rate. Now, the savings will be
calculated, and displayed in the Saving field.
- In the Depreciable field, enter a depreciable investment.
- In the Sunk field, enter a sunk investment. Now, the total investment will be
calculated, and displayed in the Total Investment field.
- In the Required ROI field, enter a required return on investment.
- Calculate the return on investment with the Net Present Value method to receive the
result in the Earned Value and Net Present Value fields. If
approved, the Approved check box will be selected.
- Adjust a value by erasing the requested field value and clicking Get Defaults,
if the default value is requested again. The default value will be shown, and a recalculation is
done.