MAPI method

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The MAPI method is an investment calculation method and represents a further development of the static profitability calculation. It is used to solve replacement and rationalization decisions . It was developed by Terborgh at the Machinery and Allied Products Institute (MAPI).

In order to make a decision, MAPI calculates a relative profitability that sets the income and costs of the next year (for new investments) in relation to the capital released (for non-investment). The exclusive consideration of the next year assumes that the relative profitability of the investment always increases.


With (each related to the next year):

BG : Change in operating profit, i.e. the changes in income and expenditure due to the replacement investment.

UK : Avoided capital consumption (depreciation and maintenance).

ES : resulting tax burden, e.g. B. 70% (BG + VK) at 70% taxes

IK : Investment costs, i.e. acquisition costs minus repairs avoided in all remaining years of use of the old system and its residual value.

EK : arising capital consumption:

MS : The MAPI rate is read from a diagram. It depends on the useful life and the residual value of the new system. If the taxation is not equal to 50%, a correction value must be added to the MS. You can find out about this from special tables.

D : If the degree of urgency is higher than the discount rate , the replacement investment using the MAPI method is advantageous. If there are several possible investment objects, the one with the highest level of urgency should be selected.


In order to keep the application simple, some decision parameters were assigned standard values ​​for the MAPI method. This can falsify the accuracy of the result if the situation deviates from it. The assumptions are:

  • A leverage ratio of 25%
  • Debt capital interest of 3%
  • A return on equity of 10%

These assumptions reflect the situation in the USA . With the decision for a simple application and data acquisition to the disadvantage of great accuracy, the method is primarily intended for small to medium investments.