break even point analysis

I have simulated prices in order to calculate the PV and NPV of a project, i have a fixed price and cost for the product. With this i want to calculate the value of the cash flow so that the NPV = 0.

Below is my current code. for every month the production and cost of the product is the same, the only thing that fluctuates is the simulated price which obviosly affects the CF each month.

Answer 1

[Zuber Khan]

Hi,

You can try using Financial Toolbox present in MATLAB in order to cater to your needs.

For instance, "pvvar" function can be used to calculate the present value of varying cash flow. You can refer to the following documentation to know more about it.

https://www.mathworks.com/help/finance/pvvar.html

Further, Financial Toolbox provides a collection of financial tools to compute cash flows and sensitivities for annuities, amortization and depreciation, present and future value, and rates of return. Kindly follow the below mentioned documentation for more information.

https://www.mathworks.com/help/finance/analyze-cash-flows.html

Alternatively, if you want to proceed through analytical approach, then you need to adjust the cash flow values iteratively until the NPV is zero. This is typically done using a numerical method such as "Newton-Raphson" method. You can check out the following sections of symbolic Math Toolbox for related examples.

https://www.mathworks.com/help/symbolic/mathematics.html

https://www.mathworks.com/help/symbolic/sym.solve.html

You can also search through the File Exchange forum for numerical solvers such as Newton-Raphson. For instance, following is one such resource that provides a demonstration of the "Newton-Raphson" method.

https://www.mathworks.com/matlabcentral/fileexchange/68885-the-newton-raphson-method

I hope it will help you to resolve this problem.

Regards,

Zuber