ABSTRACT
From the perspective of law enforcement entities, the use of the NPV is bene”cial when examining potential monetary savings through time. During 2010, this economic analysis was conducted by the City of Tacoma, Washington, with respect to its assigning of law enforcement vehicles among patrol o°cers. e use of NPV was conducted during this economic examination. According to the City of Tacoma, the interpreted outcomes of the
NPV analysis suggested that it is bene”cial to “assign vehicles to o°cers than to have them share vehicles from a pool” because increases of o°cer productivity occur through time. is increase of personnel productivity occurs because of “of not having to check out a pool vehicle and transfer equipment in and out of them each day.” e outcome of this analysis showed that annual savings of approximately “$1.5 million per year for assigned vs. pool vehicles” could be generated.*
is example shows the use of the NPV concept to examine cost savings within an organizational setting. e use of the NPV method demonstrates the relevancy of its construct because it provides a means through which cash ¥ows may be examined and compared in terms of current dollars. It involves the discounting of future monetary values into the terms of present monetary values for a monetary comparison of values. erefore, organizational leaders gain a perspective of value regarding the pursuit of a potential capital investment project.
