Variable costs are any expenses that change based (NPV) of all cash flows equal to zero in a

on how much a company produces and sells. This
means that variable costs increase as production
rises and decrease as production falls. Some of the
most common types of variable costs include labor,
utility expenses, commissions, and raw materials.
Variable costs change based on the amount of
output produced. Variable costs may include labor,
commissions, and raw materials. To calculate
variable costs, multiply what it costs to make one
unit of your product by the total number of
products you've created. This formula looks like
this:
Total Variable Costs = Cost Per Unit x Total
Number of Units.
Fixed costs, on the other hand, are any expenses
that remain the same no matter how much a
company produces. These costs are normally
independent of a company's specific business
activities and include things like rent, property tax,
insurance, and depreciation. Fixed costs may
include lease and rental payments, insurance, and
interest payments.
Fixed Costs = Total Costs – (Variable Cost Per Unit
× Number of Units Produced)
Capital Budgeting
discounted cash flow analysis.
4. The benefit-cost ratio (BCR) - is a ratio used in
a cost-benefit analysis to summarize the overall
relationship between the relative costs and
benefits of a proposed project. BCR can be
expressed in monetary or qualitative terms. If a
project has a BCR greater than 1.0, the project
is expected to deliver a positive net present
value to a firm and its investors.
Total cost is fixed cost (FC) plus variable cost (VC),
or TC = FC + VC = Kr+Lw.
The total cost formula is an accounting equation
that shows the cost per unit of the quantity that
has been produced. It is calculated using two
figures: the first figure represents the total
production cost, whereas the second figure
represents the quantity produced. The total cost of
production is divided by the total amount paid in
numbers, forming the average total cost formula.
A straightforward and easy-to-use procedure, the
total-cost formula is calculated by dividing the total
production cost by the number of products
manufactured. Here is everything you need to
know about the total-cost formula, how it works,
the advantages of using it for your business, and
the setbacks that may come with it.

1. Payback Period - The term payback period

refers to the amount of time it takes to recover
the cost of an investment. Simply put, it is the
length of time an investment reaches a
breakeven point.
2. Net Present Value - is the difference between
the present value of cash inflows and the
present value of cash outflows over a period of
time. NPV is used in capital budgeting and
investment planning to analyze the profitability
of a projected investment or project. NPV is the
result of calculations used to find the current
value of a future stream of payments.
3. The internal rate of return (IRR) - is a metric
used in financial analysis to estimate the
profitability of potential investments. IRR is a
discount rate that makes the net present value