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Accounting vs. NPV Break-Even - Which is better?

break-even analysis NPV payback

Most recent answer on Nov 11, 2023

Clara

Expert

McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Clara

Expert

gave the best answer on Nov 11, 2023

McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello! Precisely for the high amount of questions (1) asked by my coachees and students and (2) present in this Q&A, I created the “Math & Formulas - Economic and Financial concepts for MBB interviews”, recently ... (read entire answer)

2
Answers

19.9 k
Views

12
Total Upvotes

on Nov 11, 2023 on Nov 11, 2023
Last Activity

NPV - ROI : can someone help me in understanding the difference in usage?

Investment NPV ROI calculation

Most recent answer on Sep 01, 2023

Anonymous gave the best answer on Nov 09, 2018

OK, an answer on this could fill a book, but I'll do my best. NPV means, as you surely know, the Net Present Value of a series of Cash Flows (from an investment for example). That means that all cash flows resulti ... (read entire answer)

2
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7.7 k
Views

8
Total Upvotes

on Sep 01, 2023 on Sep 01, 2023
Last Activity

Net present value calculation for both perpetuity and for fix period

NPV

Most recent answer on Jul 27, 2023

Anonymous gave the best answer on Nov 08, 2018

Hey there, If you don't have an MBA, the likelihood of having to use the formula in an interview (at least for MBB) is close to zero. If you did, you'd probably just to have to discount a couple cash flows in the futu ... (read entire answer)

3
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10.9 k
Views

20
Total Upvotes

on Jul 27, 2023 on Jul 27, 2023
Last Activity

Looking for exciting discussions from the community?

Replacement Analysis

NPV Replacement concept

Most recent answer on Jun 27, 2023

gave the best answer on Jun 23, 2023

Wow! This requires a full excel sheet setup. Speaking honestly, I would do this for a paid candidate but not a free Q&A….this is quite an extensive problem! That said, your setup looks to be correct. The most import ... (read entire answer)

3
Answers

606
Views

36
Total Upvotes

on Jun 27, 2023 on Jun 27, 2023
Last Activity

NPV /WAAC ?

Bain & Company BCG Case Interview Case Maths Math problem MBB McKinsey & Company NPV

Question edited on Jul 26, 2021

Francesco

Expert

#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success (➡ interviewoffers.com) | Ex BCG | 10Y+ Coaching

Francesco

Expert

gave the best answer on Jul 22, 2021

#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success (➡ interviewoffers.com) | Ex BCG | 10Y+ Coaching

Hi there, Several questions ;) Let me go one by one. 1) NPV The correct NPV formula closer to what you reported is: NPV = -Initial Investment + (FCF/Discount Rate) Where FCF= Free cash flow of the project g ... (read entire answer)

3
Answers

2.3 k
Views

9
Total Upvotes

on Jul 26, 2021 on Jul 26, 2021
Last Activity

Probability calculation in NPV

NPV

Most recent answer on Jul 23, 2021

Francesco

Expert

#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success (➡ interviewoffers.com) | Ex BCG | 10Y+ Coaching

Francesco

Expert

gave the best answer on Jul 23, 2021

#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success (➡ interviewoffers.com) | Ex BCG | 10Y+ Coaching

Hi there, I guess you mean that the expected operating profit, not the NPV, is $45M (without considering the upfront cost). If they are applying the 50% just to the operating profits, it means that the upfront cost ... (read entire answer)

2
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3.1 k
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27
Total Upvotes

on Jul 23, 2021 on Jul 23, 2021
Last Activity

What’s the meaning of discount rate ‘r’ in NPV?

Corporate Finance Finance MBB NPV

Most recent answer on Apr 30, 2020

Sidi

Expert

McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 350+ candidates secure MBB offers

Sidi

Expert

gave the best answer on Apr 09, 2020

McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 350+ candidates secure MBB offers

Hi! simple answer: the discount rate r corresponds to the cost of capital. For equity, the cost of capital corresponds to the opportunity cost of not investing it. This opportunity is the rate of return of riskles ... (read entire answer)

4
Answers

2.1 k
Views

20
Total Upvotes

on Apr 30, 2020 on Apr 30, 2020
Last Activity

NPV of a Perpetuity --> How to improve?

Corporate Finance NPV Valuation

Most recent answer on Apr 30, 2020

Luca

Expert

BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached

Luca

Expert

gave the best answer on Apr 11, 2020

BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached

Hello Dee, Your answer sounds good, you have basically cover all the possibilities. Just remember that there are several ways to increase your yearly cash flow, not only findind new sources of revenues. More over, a g ... (read entire answer)

5
Answers

1.5 k
Views

27
Total Upvotes

on Apr 30, 2020 on Apr 30, 2020
Last Activity

Investment Comparison with different up-front costs (NPV-based)

Cases Finance Investment NPV profitability

Most recent answer on Apr 11, 2020

Luca

Expert

BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached

Luca

Expert

gave the best answer on Apr 11, 2020

BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached

Hello, This is a very interesting question. Before taking a decision it's fundamental to ask interviewer some questions: What is the target of our client? It's more interested in an higher NPV or ROI? As you know, ... (read entire answer)

3
Answers

1.3 k
Views

25
Total Upvotes

on Apr 11, 2020 on Apr 11, 2020
Last Activity

Mini Case: Calculate your own NPV

minicase NPV

Most recent answer on Mar 27, 2020

Francesco

Expert

#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success (➡ interviewoffers.com) | Ex BCG | 10Y+ Coaching

Francesco

Expert

gave the best answer on Mar 27, 2020

#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success (➡ interviewoffers.com) | Ex BCG | 10Y+ Coaching

Hi there, I reported my comments below: you can use a DCF model as for several years it approximates well the real flow of money (which would end somewhere between age 80 and 110). the discount rate represents t ... (read entire answer)

4
Answers

1.4 k
Views

10
Total Upvotes

on Mar 27, 2020 on Mar 27, 2020
Last Activity

Calculation for NPV / VAN

NPV

Question edited on Aug 24, 2019

Francesco

Expert

#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success (➡ interviewoffers.com) | Ex BCG | 10Y+ Coaching

Francesco

Expert

gave the best answer on Aug 24, 2019

#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success (➡ interviewoffers.com) | Ex BCG | 10Y+ Coaching

Hi Anonymous, the link you posted seems not working, could you please post the full question? We can then provide an answer to it. Best, Francesco --- EDIT The new link works, thanks. The solution is quite ... (read entire answer)

1
Answer

3.0 k
Views

1
Total Upvotes

on Aug 24, 2019 on Aug 24, 2019
Last Activity

How to use DCF, NPV and ROI

DCF NPV ROI calculation

Recent activity on Jun 27, 2017

Olu

Looking for solid partners (10+Cases) . Currently preparing for MBB,Tier II & Big 4- Given and Done 15+ cases

Olu gave the best answer on Jun 27, 2017

Looking for solid partners (10+Cases) . Currently preparing for MBB,Tier II & Big 4- Given and Done 15+ cases

NPV= Net Present Value- [-investment +( Summation of FCF/(1+wacc)^t from 1 to t)].This is a basic formula, it is way more involved than the substituting numbers in the formula, typical you would need to create a DCF mo ... (read entire answer)

2
Answers

9.2 k
Views

4
Total Upvotes

on Jun 27, 2017 on Jun 27, 2017
Last Activity

Do you have a question for our consulting experts, too?

Case: Net Present Value Calculations

Case Calculations Discounted Cash-Flow Net Present Value NPV

Recent activity on Jan 30, 2017

Francesco

Expert

#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success (➡ interviewoffers.com) | Ex BCG | 10Y+ Coaching

Francesco

Expert

gave the best answer on Nov 20, 2016

#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success (➡ interviewoffers.com) | Ex BCG | 10Y+ Coaching

Hi Anonymous, To answer your questions, I will first describe the theoretical correct valuation approach, and then the simplified approach you can normally apply in consulting interviews. Full DCF Analysis From a ... (read entire answer)

5
Answers

23.9 k
Views

79
Total Upvotes

on Jan 30, 2017 on Jan 30, 2017
Last Activity

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