40. BP Company is considering two capital investment proposals. Estimates regarding each project are provided below:    Project LS1 Project RS1 Initial investment P2000,000 P300,000 Annual net income 10,000 21,000 Net annual cash inflow 50,000 71,000 Estimated useful life 5 years 6 years Salvage value -0- -0-   The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Period 9% 10% 11% 12% 5 3.890 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The internal rate of return for Project RS1 is closest to?

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A: Present value is the sum of future cashflows discounted at discount rate

Q: 0    46000    Net annual cash inflow 110000    146000    Estimated useful life 5 years    6 years…

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.