Marginal Costs Old price x old quantity – New price x new quantity (For MC in goods) Old wage x old number of workers – New wage x new number of workers (For MC in wages) Rule of 72 / Rule of Thumb *Used only when the investor wants to double his investment 72/rate Contribution Margins Contribution Margin per unit: Unit Selling price-Variable Cost Contribution Margin Percentage: Contribution Margin Per Unit/Unit Selling Price Break-even Point Break-even Point Sales Volume or Quantity: Fixed Costs/Contribution Margin per unit Break-even Point Peso Sales or Amount: Fixed Costs/Contribution Margin Percentage Proving the BEP Quantity and Amount Sales (Unit Selling Price x BEP Quantity) Variable Costs (Variable Costs x BEP Quantity) Contribution Margin (CM per unit x BEP Quantity) Less: Fixed Costs Net Income (Loss) or Break-even Computing BEP with Desired Profit given Break-even Sales Volume or Quantity: Fixed Costs+Desired Profit/Contribution Margin per unit Break-even Peso Sales or Amount: Fixed Costs+Desired Profit/Contribution Margin Percentage Present Value & Net Present Value Present Value Note: Depending on the number of years given the process may take longer or shorter than the given illustration below. (Each proposal will pay out within three (3) years) Solution for getting the Present Value: Step 1. Get the Present Value for each Year given in the proposal *If 1 of the years does not pay out any money then its present value will be zero(0) To get the present value of each year: 1st Year: Pay out amount stated in the proposal/discount rate^1 = Present Value 2nd Year: Pay out amount stated in the proposal/discount rate^2 = Present Value 3rd Year: Pay out amount stated in the proposal/discount rate^3 = Present Value Notes: *Discounts rates may be referred to as interest rates in some problems, so if you don’t see any discounts rates in the problem just use the interest rate given. *Tip to save on solving for each proposal: Calculate the squared and cubed amount of the discount rate and note it on the side, it will help you save up some time in calculating for it again in the other proposals stated. *To solve for the Present Value of each Proposals just ADD each present value of each year. (DO NOT SUBTRACT the cash outflow if the problem seeks only the PRESENT VALUE of the Proposals not the NET PRESENT VALUE.